Who knows nothing about the housing market?

meek01_3601_01

As the Lyons Commission gets underway, there’ll be plenty of people arguing there is no housing problem at all, or we’re looking at it wrongly, or there’s an obvious solution that no one has yet thought of. More on the topic of easy fixes in due course, but in the meantime we have the blog Left Outside offering Four charts that prove you know nothing about the housing market.

 

The main point made is that numerous articles have pointed to the housing output achieved in the 1960s and 1970s – for example the recent one by James Meek, which reproduces the graph above. But these articles show they ‘know nothing’ about the housing market, because they ignore the effects of slum clearance. If you take the loss of houses into account as well as the gain from new building, you get a chart like the one below.

annual additions to the housing stock

As Left Outside says, the post-war years still look good, but a lot less ‘stellar’. It goes on to point out that output during the Blair/Brown governments now looks pretty good by comparison. The blog goes on to discuss the changing composition of the stock (houses being subdivided into flats) and the influence of planning legislation.

However, the main point seems to be to rubbish the argument that, if we built so many houses after the war, why can’t we do so now? But of course serious commentators (like those who write for Red Brick) are simply making the point that the building industry was able to gear up and deliver on a massive scale in those post-war years, but seems incapable of doing so since the 1990s. The fact that it was also engaged in slum clearance does, if anything, make the point even stronger. We might add that, in the 1980s, while social housing output fell sharply, private housebuilding was sustained and increased to around 200,000 per year towards the end of the decade. To give a more comprehensive picture, as Left Outside claims to do, we might also point to the massive investment being made in housing renewal in the 1980s, which also fell off rapidly in the 1990s. So the fallback in public construction in the 1980s appears not to have led to a loss of capacity – it got diverted into private housebuilding and renovation.

Left Outside makes a reasonable but different point, that if someone needs a house, it’s the total stock available that matters, not the numbers of newly built ones. If you need social housing, then it’s the number of new lettings. These issues are important too. But they don’t detract from the fact that we had massive capacity to build and repair houses until the 1980s.  If we could achieve similar private output now, while also building enough social dwellings, we could add around 240,000 units to the stock each year. Instead, we are struggling to produce even half that number. As house prices have boomed, aside from the mini-peak just before the crunch in 2008, the private sector has largely failed to respond.  Despite Left Outside’s four charts that prove housing commentators ‘know nothing’, we do know one thing: that the housebuilding sector is under-delivering.

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2 Responses to Who knows nothing about the housing market?

  1. monimbo99 says:

    Yes that’s a valid point, and the problem is that once capacity is lost, it’s very difficult to rebuild it. So Labour’s target of 200,000 per year by the end of the next parliament, while still modest, will significantly stretch capacity – in terms of land, development and building skills, as well as finance.

  2. Left Outside says:

    Thanks for linking and adding your comments. I didn’t know about redbrick, but I think I’ll follow. Looks interesting.

    Something else which I haven’t ever touched on, but which I’m sure will be important, is the shear weight of public infrastructure that needs to be developed over the next decade. Lots of new rail and power stations and renewables and smart meter installations and communication networks…etc.

    If we’re simultaneously building three nuclear power stations in five years times (which looks likely) we might have 15,000 construction workers tied up before we even get to housing. Not sure how important that is, but thought I’d raise it here.

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