Affordable homes

Who's to blame for the lack of affordable housing?

In a recent speech, Theresa May announced that young people are “right to be angry” about the lack of affordable homes.

On the face of it, the statement seems like your typical politically engineered soundbite. At a time when the Conservative party may be unpopular among young voters, it’s understandable that they would attempt to show the young that they care about their plight, understand their suffering and support their rage against the machine. 

However, more than simply garnering the dismissive sneers of young voters, the phrase “right to be angry” poses a more insidious danger of obfuscating the causes and thus solutions of the housing crisis and tarnishing those who are essential to help fix it. 

First of all, why “angry”? Why not the young are right to feel “despair”, “desperate”, “overwhelmed”, “anxious” or “bereft of spirit”?

The term “anger”, suggests a malevolent agent to be angry at. It wouldn’t make sense to say: “I am angry at the snow, because I couldn’t get into work today.” So if the youth’s anger is righteous and rightful, then who are they right be angry at? Theresa May doesn’t specify, which leaves the field open for her supporters and opponents to play political football. 

Perhaps the young are right to be angry at large housebuilders who may have restricted housing supply and land banked in order to drive up prices and drive out competitors. Except on closer reflection this assertion is not as clear cut is it seems. A study conducted by Chamberlain Walker reports that 55% of planning permission is held by ‘non-builders’, and that even when a builder has land with planning permission to build upon, scores of onerous “pre-commencement conditions” can delay construction from starting for months/years on end.

Perhaps the young should be angry at smaller housebuilders for not contributing to housing supply. In 1988, some 12,000 SME housebuilders built almost 40% of all homes. By 2015, the numbers of SMEs had dwindled to around 2,500 operators, who built only 12% of the total supply. So perhaps the young should be angry at successive governments – both national and international – whose reforms to planning law and banking regulation drove the SME sector to ruin by decreasing the availability of buildable land and access to finance.

Perhaps they should be angry at their parents’ generation who, encouraged by the government, established a buy-to-let empire from the mid-1990s onwards. By 2014/15, 19% (4.3 million) of households in England were owned by landlords. Or conversely, perhaps they should be angry at their own parents, who didn’t invest in property during this time, and so are unable to provide them with the financial help they need to get on the ladder themselves.

However, why should they limit their anger to the supply side of the crisis coin, when there’s plenty of available anger on the demand side?

Perhaps they should be angry at the EU and Labour government for opening the door to unfettered immigration which, according to the University of Oxford, was responsible for 55% of the population boom of 14.3% between 1991 and 2016 (the population growth between 1971 and 1991 was only 2.7%). Or perhaps they should be angry at the alleged anti-immigration voters for Brexit, whose actions could cause a decline in workers for the construction industry and a rise in the costs of materials.

However, the growth in population per se is only one factor affecting housing demand, declining household size is another. The average household size was almost three people per home in 1971, by 2011 it was 2.35. So perhaps the young should be angry at themselves for wanting to live in more solitary circumstances compared to their grandparents, or they should be angry at the economic growth of the last 50 years which has enabled people to live in smaller households.

But is the housing crisis really caused by too many people trying to live in too few homes? Arguably, prices have risen most dramatically in response to financial policy. Since 1989, interest rates in the UK have fallen from almost 15% to 0.5%, and house prices have risen in absolute terms by more than 250%. So perhaps they should be angry at the Bank of England for lowering rates, which caused a torrent of money to enter the market as debt was cheaper and practically non-existent returns elsewhere meant that one of the few remaining ways to make one’s money work was to invest in property. Or perhaps they should be angry at the BoE for raising rates, which will make mortgage repayments higher and thus homes less affordable?

It’s all too easy to become angry. When I was a child and I bumped into the vacuum cleaner, my parents would encourage me to be angry at it. As I got older, I learned that despite my rage against the machine, the vacuum cleaner refused to move out of my way. In an era of increasing polarisation, the last thing a society facing serious problems needs is more anger to direct towards one another. The truth is that society as a whole has helped to create a housing crisis over the last three decades, and it will take a society to help address it. 

Anger won’t help to do this.

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