This post is presented by WhatHouse? the leading portal for new build homes in the UK.
As part of last year’s Autumn Statement, chancellor Philip Hammond said the government would invest £3.7bn in building 140,000 new houses – 40,000 of them classed as “affordable”. The announcement was cautiously welcomed by many within the housing industry; a number of other industry figures, though, were quick to point out that £3.7bn was still a drop in the ocean compared to what was really needed to tackle the housing crisis.
So who’s right? Could this £3.7bn make some difference or even solve the housing crisis altogether? Or has the housing crisis already got to a stage where it would be nigh on impossible for any government to tackle it successfully?
Apart from anything else, it’s hard to overestimate the scale of the UK housing crisis right now. The Redfern Review, published in November last year, was just one report of many to highlight how severe the shortage of affordable homes had become. It showed that since 1996 real house prices have risen 151 per cent, whilst wage growth has been much slower – and for the last decade has entirely stagnated.
The result of this is the average price of a UK home is now six times the average income. This widening ratio between house prices and earnings means it’s younger house buyers in particular who are finding it hard to get on the property ladder. This in is just one consequence of a complex housing crisis that looks increasingly difficult to solve with each year that goes by.
The good news is that, in addition to the £3.7bn put aside for new homes, the Chancellor also announced that the government was committed to doubling the annual capital spending on housing. Further good news is that the government has pledged is to build 200,000 new homes each year until a total of one million new-build properties are completed by 2020-21.
However, most analysts believe that at least 250,000 new homes need to be built annually, to keep up with population growth alone. In addition, the government’s promised figure of 200,000 new homes is thought by many to be a little optimistic. Only 160,000 new houses were completed in the UK during 2015.
As for that £3.7bn investment, even if it doesn’t make a significant impression in regards to the overall housing crisis, its importance as the headline act in the chancellor’s first Autumn Statement could still prove to be significant. It suggests that the government is indeed serious about making housing policy one of its top priorities, as it has previously stated.
It should also be noted that the first major government policy announcement of 2017 was regarding housing and the creation of 14 “garden” towns and villages in England which should result in around 200,000 new homes being built.
So if, sometime in the next few years, it becomes clear that the housing situation has significantly improved due to government policy, then the £3.7bn announced in last year’s Autumn Statement may be remembered – not so much for the actual amount, but as the first sign the government was genuinely willing to tackle the crisis. The next test to see if this optimism holds up is when the government’s White Paper on housing is published later this month.
Keith Osborne is online editor at WhatHouse?, the UK’s best new homes portal and housing scheme advisory source. Keith has over 15 years’ experience writing within the property and new build homes industry. Each year he inspects new build homes as a regular judge for the biggest housebuilder awards in the UK – The WhatHouse? Awards.