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News - 13 December 2003

Government has its finger on the Housing Problem but Not the Solution

The Chancellor of the Exchequer blames the failure to build enough new homes for the volatility of the housing market which has seen prices in the south east rise by 13% in the last year. Finding reasons for the problem is easy compared to finding solutions.

A report to the Treasury by Kate Barker (a member of the Bank of England’s MPC) last week, showed that house building has declined sharply over the past 30 years as the public sector has largely pulled out of the game and the private sector has failed to take up the slack. She suggests that the U.K. needs another 39,000 new homes every year if it is going to keep pace with the formation of new households. This represents a depressing 28% increase on the current rate of construction.

The blame is laid at the door of both house builders and local authority planners who are strictly interpreting the government’s directive that the bulk of new houses should be on brownfield sites. Consequently there is a ready made excuse for planners to bow to pressure from existing residents (who are obviously voters as well) and refuse permission for new build developments. Such refusals for significant housing projects have increased from 15% of all applications in the 1990s to 25% last year.

But the study for the Treasury also points a finger of blame at the construction industry that shies away from more difficult brownfield sites and too often produce homes that are less than satisfactory in terms of build quality. An increasing problem for the construction industry is the skills shortage as major projects (like Heathrow) soak up available labour.

The report also highlights the problems of building more homes in those areas (especially the south-east) where demand is highest but existing density is already high. Professor Christine Whitehead from the LSE (who is currently conducting research into Brighton & Hove’s affordable housing problem for the Brighton & Hove Economic Partnership) suggests that a large part of the problem is that we have become a nation of comfortable, middle class nimbies (see earlier story on Redhill Close in Knowledgebase).

The only certain conclusion is that there are no easy solutions to the housing shortage.

For the full Barker report click on the link below: - www.hm-treasury.gov.uk/consultations_and_legislation


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