In November, it was a figure of £44bn with which Philip Hammond tantalised the Commons to show he was the man to take the fight to the housing crisis and get the country building.
But like all governments, it’s the calculator and not the headline that clues you in to what is really going on.
Journalists covering the Budget soon turned to how the trailed £44bn worth of housebuilding pledges really represented just £15bn in new financial commitments: £7bn of direct funding and £8bn of loan guarantees.
The devil, as always, is in the detail because £44bn is a big hammer when you aspire to build 300,000 homes a year; £15bn not so much.
In terms of the number of homes this will actually help to build, the maths is simple. In the year to September 2017, 154,220 new homes were completed in England, according to latest figures from the Department for Communities and Local Government released in December.
The average home in England costs just over £240,000 and the average development margin is roughly 25%. This means that if the £15bn is used to fully fund the purchase and development of new properties it would help build only 83,035 new homes1.
At first sight that’s not so bad. But the chancellor’s scheme lasts five years so, unfortunately, we’ve got to cut this figure down to size as well. Spread over five years, it equates to a dismal 16,607 additional new homes a year.
Hardly the bazooka we were all led to believe it was. This is only a 10.7% rise on the number of homes already being built.
Another 16,607 would grow this to just 170,827. That’s still 129,173 short of the government’s target of 300,000 a year by 2025.
Smaller housebuilders could benefit most and the Homes Builders’ Federation said they struggled to raise loans of more than 60% of development costs. Even if the government’s new commitments were used to plug only the 40% gap, the number of additional new homes built each year could
rise to 41,518, but that is still 104,262 (35%) short of the government’s target.
So, although the government is throwing money at the problem, as a country we’re still way off the pace.
We are building fewer houses than before the financial crisis and, even in 2007, we were building fewer homes than in the mid-1960s. To put that into perspective, the population of the UK has grown 22.3% since then.
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But for all the criticism that there’s not enough money, maybe it’s more complicated than that.
Just after the Budget, many were bemoaning the fact that council’s weren’t truly freed from public borrowing caps. It’s true that local authorities used to build roughly half of all new homes.
However, councils did not reach their cap last year. In fact, £3.5bn of their total borrowing allowance went unclaimed.
Housebuilding by private developers has also failed to rise dramatically despite the existence of similar funding schemes in recent years, such as the Home Building Fund.
Even sky-high house prices in many areas – sometimes 50% above their pre-crisis peak – have failed to fuel a building frenzy.
All this raises the prospect that the country’s problems are more structural and money alone won’t fix anything.
We now have a two-speed housing market, where for reasons of geography and economic wellbeing, property in some areas languishes under a glass ceiling.
Those in London have been thrilled to see their house prices rise inexorably. However, in many areas prices have never recovered from the financial crisis and are still below their pre-crisis peak.
In other words, there is a limit to how much demand there can be for some homes, no matter how cheap they are compared with a property 200 miles away.
Scarcity of funding for smaller housebuilders is a drag on development, but so is the lack of available land.
Developers on average like to focus on areas where their properties are more in demand and they can command higher prices. Higher prices are found in areas where there are jobs paying higher salaries, typically in densely populated, urban areas.
If this reality is not confronted, London and the South East face being massively over-developed, while the rate of building is held back by scarcity of land. Green belts will be threatened, while vast areas of the country remain underpopulated.
This is why the housing crisis presents a social, as much as an economic, challenge. The ability of buyers to choose between whole regions has become as important as their ability to choose between streets.
Many individuals don’t feel they can leave London and the South East. As soon as the region’s stranglehold softens, there’s a good chance housebuilding will move up a gear, but society may have to make the first move.