Thursday, 21 October 2010

The housing market is a mess because the housing debate is a mess

Proposals by the coalition government to remove or reduce security of tenure for council housing residents has kicked off a pretty storm of reaction.

Much of the anger is directed towards the agenda of cuts which left-wing commentators argue is designed to hit the poorest hardest.

But though this may seem justified it is completely unfair.

Over at LDV the well-meaning LibDems identify the problems:
"Millions on waiting lists. An affordability crisis pushing up the average age of the first time buyer to 38. Housebuilding completions falling off a cliff. Empty homes in areas where there are no jobs and scarcity where people want to live."
But the nub of the matter has yet to be fully grasped.

The political problem is all about the term 'affordable housing'.


My stamping ground in Reading has been at the forefront of developing an effective housing policy - for a more detailed look into the background you can read a range of local stories I compiled here.

The town has experienced massive growth in the past 15 years as a hub of the new information economy, helped by good communication links, but boundary problems mean the borough has long been overcrowded as neighbouring authorities tacked their housing requirements onto growing suburbs and even they are now struggling to find space - currently around half of people living in the Reading urban zone live outside the Reading local authority.

Cllr Daisy Benson (who chairs the RBC housing scrutiny panel) reflecting on the Home Truths 2010 report issued by the National Housing Federation, said, "The fact is there is a shortage of affordable housing and because housing is not affordable it puts pressure on social housing."

Everyone agrees on the need for more 'affordable housing', but nobody knows how this can be delivered.

Is it a matter of planning? of locations? of finance and wider economic issues?

There are three interlinking, yet distinct issues conflated into the deceptively simple term - and in my view this is the cause of all the confusion: it's about quantity of supply, quality of supply and the price of the stock.

'Affordable housing' has insidiously penetrated the political vocabulary to become the new default term for all these things together - it is used interchangably to cover everything including council-owned and housing association stock, social and sheltered housing and low-end private rental property as well as average prices and general affordability.

And that's where things start to go wrong.

'Affordable housing' simply can't mean all those things simultaneously and retain any relevance. The term has poisoned the debate and prevents any advance.


Let's go back and cull a few stats from those links:
  • average house prices in Reading are nine-times average incomes (£213,346 compared to £24,487)
  • 832 affordable homes are needed every year, but only 270 are being delivered (32% delivery rate)
  • 6,000 people live in council-run social housing in Reading (including 368 sheltered homes) with another 1,300 in south Reading in privately-run social housing
  • 4,834 households are on the waiting list for social housing (an increase of 41 per cent in five years)
  • the waiting list for social housing in Reading is 7.38 years
  • 90% of increases in housing capacity in Reading are flats and house conversions
Pressures include internal migration to the town attracted by relatively high employment and income rates related to Reading's status as a growth area, helped by a variety of banner social and cultural amenities which make it a more attractive destination (university, sports clubs, retail and entertainment centre, festival etc).

All this helps explain why despite an outward image of success and growth there are a number of pockets of persistent deprivation (8 out of 93 domains in RBC boundaries are among the bottom 20% of most deprived areas in the country) and there has been growing levels of inequality among residents of the borough.

15,558 people, or 11% of Reading's 141,897 population, live in areas of most deprivation - yet this is despite being consistently ranked as the second least deprived city in the country as a whole!

More light can be thrown on this by comparing Reading's council tax bands - although each band is priced at almost 3% higher than the national average [1] the actual average paid by each household at £1,236.00, is over 3% lower than the average paid in England at £1,278.93 [2].

Reading is simply a prime example of the challenges facing the country at this time.

Divergent demographic trends have enabled politicians to ignore the underlying structural problems for too long, but while the public debate remains mired in muddled language I don't see any swift resolution to the issues.

So we must tackle the term 'affordable housing'.

This means getting back to the real issues of quantity of housing stock, quality of housing stock and the prices of the stock.

It means having the foresight to have enough of the right type of housing in the right areas.

It means ensuring cheap stop-gap solutions are not the standard.

And that means government must work together at local, national and intermediate levels in order to coordinate in the public interest.

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