For the younger generation, getting on the housing ladder is the number one concern, particularly in the South East. Travelling back to the office this afternoon gave me 30 minutes on the train to read The Standard and one of the lead stories was the ratio between average earnings and average rental payments in London.
The statistics varied from borough to borough, as you would imagine, but the overall average was that around 50 per cent of people’s income was being spent on rent payments. This is a different spin on the normal stories which circulate the focus on earnings, house prices and deposits required for first time buyers. However, the basic thrust is the same – this is a major social issue and something must be done.
There are quite a lot of issues currently facing society where everyone agrees that ‘something must be done’, but then what if that something actually makes things become more complicated.
The most salient point with regards to the UK situation is that there has been an ongoing lack of new house units being built. This was the case even during the boom years, and since the credit crunch, the situation has become even worse.
A major problem over recent years has been the lack of funding for development projects. A couple of years ago, it was really only established developers with large chunks of cash that could access development/construction loans, and that caused bottlenecks. In addition to that, mortgage lending on new builds (and particularly new build flats) was restricted, and the lenders produced a downward spiral on both ends of the market.
Lending has improved and we are now at a point where I had to sit down with a colleague last week and draw up a spreadsheet of development lenders, as there are so many new entrants that we were struggling to keep abreast of them all!
The other issue is planning and the NIMBY (Not In My Back Yard for anyone that doesn’t recognise the acronym) brigade. It is a bit like the global warming scenario – everyone agrees that people should drive less as long as ‘people’ doesn’t actually include me. Everyone wants more housing for young people, but are less keen when it means a block of flats going up at the end of the village.
The Government is also in a quandary – they have to be seen to care about the plight of the would-be first time buyer - but can you imagine the backlash if they actually undertook a radical agenda to reduce house prices by 25 per cent across the board? Great for those first time buyers, but how would you feel personally if your property value was dropped by 25 per cent?
I am running out of time to mention social housing, council-led construction and other proposed solutions for the housing issues, but ultimately we are producing more households than houses and that isn’t going to stop any time soon.
Attributed to Robert Collins, Brightstar
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