Housing - state of the nation

After a few months of watching the world grapple with the reality of Brexit (i.e. business as usual so far) and the implosion of pretty much politics as we know it, it felt appropriate to discuss the world of housing. Now I can summarise at the start that everything that has happened in recent months has done nothing to change the simple fact – there is a housing crisis in the UK across a whole spectrum of issues as highlighted by the recent #HousingDay.

To set the scene:

·        The Government made a large number of promises as part of its Autumn conference but will they help?
·        House price growth seems to have slowed further but longer term it’s still going to keep going up; and
·        Take your earnings and multiple by 10….that’s the house price!

It was a somewhat a welcome sight to see a conservative Government finally unveiling a plan that could tackle housing but most importantly it seems to appear that it’s Theresa May’s to do list – that, Brexit and possibly what colour to re-do  the walls in the Houses of Parliament – magnolia?

The key policy change was the unveiling by Hammond and Havid of a £5billion to fund tens of thousands of homes across the UK by 2020 (just ignore the previous promise of 1,000,000 new homes by 2020 – this is different!). This coupled with planning rule changes to encourage more brownfield sites being developed on, which I personally thought had already been promised. So will this initiative solve the housing crisis – erm, no!

Solving the housing crisis needs to come from all fronts – housebuilders, local authorities (440 homes in Q3 Fy17) and housing associations. It doesn’t bode well to attack housebuilders as Javid did – it is strong to suggest land banks are by default creating a “stranglehold” without seeing the colour in the detail. Some sites are held up in options, awaiting planning and simply companies need certainty of pipeline – I’d hate to see how long a housebuilder lasts that buys land and builds and repeats. Either way at least “housing” was centre stage at the conference.

You then look at the wider economy – figures indicated construction wasn’t stalling in the “new world” but recent Markit/CIPs data suggests growth in September – due to the housing sector – which is welcome after the seven-year low in July. So investment in housing is even more critical to support the significant large construction sector – no-one wants a repeat of 2008 – 2012 and that is where infrastructure investment is needed (but that’s for another day).

Despite these figures, house price growth has slowed in September (but is still growing, let’s not kid ourselves). The average house price now stands at £206,015 – being 0.3% rise in September and the annual growth now at 5.3% (Nationwide) or 5.8% (Halifax).  Recent data suggest house prices have reached 10 times earnings in over a third of England & Wales – which is a worry statistic for new house buyers and makes me think I should be moving to a larger house if this is the case.

As always there is a difference between differing statistics but the two key points to take away from this:

·        There is ongoing growth still across all regions; and
·        The South East, unsurprisingly, still leads the pack for growth (across both statistics).

Now as a Yorkshire man, and infact looking at the North as a whole, it is good to see the levels of growth but it comes back to the underlying issue – not enough affordable housing – these figures don’t help that!

The outlook for housing is mixed, there is certainly difficulty accessing the ladder still – eased slightly by a mortgage rate cut but not forgetting the shortage of supply which will continue to constrain activity.