One of the “perks” of this job is that I get to sit in on lots of discussions about the causes, symptoms and solutions for the UK’s housing crisis.
Two things always tend to strike me. First how many people claim to have discovered the single “silver bullet” which, when addressed, will solve the crisis. And second how London centric the discussions often
In respect of the former the reality is that there are huge number of causes and possible solutions. Every lever needs to be pulled right now rather than just one or two which suit the politics of the proponent.
In respect of the latter the London focus is entirely understandable. The participants usually live in London or the South East and are often personally affected by the incredible dynamics of the London market.
Rather than one simple cause of the London overheating it seems, at this particular moment, that there are a range of positive forces making London more and more attractive as a City. This is generating housing demand from numerous sources relentlessly pushing the market upward. What are these forces and would it be sensible to try and hold them back?
The first is undoubtedly the dramatic rise in the quality of London’s schools. 20 years ago they were a basket case – now thanks to a range of investment programs (The London Challenge, Pupil Premium, higher teacher salaries, Study Plus) they are perhaps the best in the Country. No longer do young families flee London in order to give their kids a chance in life. This means even less homes on the market available for others.
Secondly overseas investors want to invest here. The political stability since The Glorious Revolution in 1688 is in stark contrast to, inter alia, Ukraine, Thailand, Greece or even France. This confidence and investment in our country is helping to get new homes built. Any idea that investment which gets homes built, is somehow unwelcome, seems folly to me. Once built they are occupied by Londoners and absorb market pressure.
Walking round London is simply different to walking round other UK cities. You can feel the economic confidence – on the street, in meetings and during economic discussions. The policy challenge is how best to harness a speeding recovery.
In the North East the challenge remains to stimulate one. Without available jobs in the regions the traditional flight of 28-35 year old teachers, planners, engineers, nurses, lawyers, etc from London simply isn’t happening anymore. Their houses aren’t becoming available.
Throughout the 90′s and 00′s London haemorrhaged these families to the Midlands and North. They helped take up the huge amount of public (and private) sector jobs in the regions being created by a Government spending boom. Those opportunities don’t exist any more as the economy and public sector employment has reduced. Meanwhile there is evidence that public spending and employment in London has actually increased – perhaps understandable as managing growth takes more resource than stagnation or decline.
London’s ever improving cultural attractions, facilities and public transport is also, itself, driving housing market pressure. As arts, transport and sports budgets get slashed in places like Newcastle those relying on such opportunities seek them elsewhere. I know of two, wealthy baby boomer couples who have downsized to two smaller properties – one in the North East and one in London. Why? – firstly to be closer to nest-flown children but also because they want to see good shows, visit great exhibitions and eat at busy restaurants. In areas that are vibrant any night of the week. Plus the capital growth of the last 2 years in London (compared to the North East) means the investment has made obvious financial sense.
SO – in London we have better schools, a successful growing economy, more public sector jobs, ever improving cultural attractions and more investment confidence. Clearly all great news?
EXCEPT that all of this upward housing market pressure means it is becoming virtually impossible for Londoners to gain access to decent housing without baby boomer backing. The average London house price is nearly 10 times annual salary and rents are rising 8 times faster than earnings. Last year the national average salary went up by £261 whilst the average house price went up £16,000.
At the risk of walking well trodden ground the answer must be a dramatic increase in housebuilding including a truly radical appraisal of the role and function of Green Belt in many of the outer London Boroughs. Public and private sectors working together – sharing risk by taking advantage of (hopefully) a relaxation of the local authority lending cap. It means finding underused rail stations and building attractive garden villages and cities there. After the endless rhetoric is it now time for action?
Plus a more positive policy focus on rebalancing the economy of the country. Shifting national public functions and jobs away from the areas of housing shortage and towards areas in need of jobs and investment is a welcome start and would not harm London. This shift could help kick start, an ultimately necessary, private sector resurgence in the North.
Clearly its much more complex than this but, as a dyed in the wool northerner, this seems more sensible than pursuing measures to inhibit the global economic success and attraction of our capital city.