Gently Deflate the Housing Bubble; Get Britain Building

Filed in Economic News and Opinion by on May 10, 2014 1 Comment

It’s time Britain started building again. Building the homes that millions desperately need but currently have little hope of ever owning or paying reasonable rents to live in. Our housing market is not just broken; it’s dysfunctional and contributes hugely to widening inequality and opportunity.

Britain’s biggest Trade Union, Unite, estimates that ‘five million people are in a housing crisis in this country’ (Daily Mirror 5/4), whilst a typical home marches ever quicker to an eye watering £200,000, many times the average wage. In London, the average price will soon surpass half a million pounds and due to this relentless property inflation, Lord Lawson, has called for the abolition of Chancellor George Osborne’s patently absurd Help to Buy (votes) scheme in the capital. Former Chancellors Lamont and Darling have expressed similar views, with Mr Darling pointing out that successive administrations ‘keep repeating the same mistakes.’

So what is to be done? Well to start with, the siren voices of those who claim to want to protect our green and pleasant land, otherwise known as the Countryside Alliance, often in league with the National Trust, should be largely ignored. Less of our countryside is ‘covered in concrete’, as they would no doubt put it, than is covered in golf courses. Large, relatively unused and far from beautiful areas of countryside will have to be developed if we are ever to meet present or future housing need. The knee-jerk objection to new building has to stop.

Housing Bubble.

However, it’s not just new building that we need, we also need to far better utilise the many urban brown field sites that still sit vacant, along with the thousands of empty units above retail outlets. This doesn’t mean that we should permit private developers to hoover up empty plots on the cheap, or that they should be given Cart Blanche to build tiny badly insulated and poorly designed flats. Nor does it mean that we should cram people in to unsuitable empty buildings.

Instead, our local authorities should be given the same powers as others to borrow on the open market, in order to provide the homes that they know are required for the many thousands languishing on council waiting lists. Retail owners, often huge multi-national companies, should be encouraged and perhaps compelled, to ensure that empty second floor rooms that we see all too often in our high streets, are habitable. This could bring to an end the scandal of thousands of construction workers presently sitting idle, whilst councils are prevented from building. Utter madness and frankly illiterate economics.

If we build houses, particularly family homes that people want to live in, whether for rent or purchase; we could put people in homes and jobs. So Labour’s proposal to provide 200,000 homes by the end of the next parliament is to be welcomed, as are their proposals to regulate rents, something that much of Europe and even market driven New York are happy to do.

What is more, if we were to pay those employed in an expanding building trade, (along with all other council employees) a Living Wage, enforced by local authorities, money would go in the pockets of those more likely to spend it, creating local, sustainable economic demand. Creating a more dynamic local economy, would also ensure the stimulation of employment growth along the supply chain, whether it is carpet makers, bathroom fitters or garden outlets. The whole economy, which means all of us, would benefit.

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  • Mancrjh

    A virtuous cycle for our economy. Very good article. Let’s hope voting public agree Britain deserves better