There were 738,414 empty homes in the UK in 2010 – there will be around the same number today. Yet I read we are short of houses, and need to build more houses. I wish today to deal with some of the myths in the housing debate.
Myth One: The south-east is selfish, with Nimby Councils refusing to build the homes we need
Some argue that the selfish south and London refuse to grant permissions and build more homes where they are needed. If you look at Quarter II 2011 figures you will find that London built the most new homes – 6831, and the South East the second most at 5833. These figures are well up on a year earlier. The whole of Wales managed only 613, well down. Also falling were the North East at 806, Yorkshire and Humberside at 1903 and East Midlands at 1941.
My own constituency is proof that the south-east has been far from seflish and Nimby like – a combination of willing Councillors and Councils, and pressure from government plans and Inspectors, has seen largescale new development of homes over the last twenty years. In Wokingham Borough there is no evidence that the new accent on localism is going to change this drive for more building. The Council has signed up to four major areas for housing growth, and is planning substantial new settlements in each.
Myth Two House prices rose too fast because there was insufficent new build
House prices are mainly determined by the price of second hand houses. 300,000 houses move from empty to use each year aside from any new developments, and many occupied homes change hands. The main reason homes became so expensive in the period 2001-8 was the huge surge in mortgage finance, with companies like Northern Rock falling over themselves to lend higher multiples of earnings, bigger proportions of the purchase price, and to accept ever higher valuations. The mood was very different from when I bought a house in 1993. Then the Building Society would not accept the valuation I had agreed to pay, despite it being around 25% below the previous peak. They worked the mortgage out on a lower figure to protect themselves in a falling market.
It would not have been possible to keep house prices down by any possible increase in the new build rate. In places like Wokingham where the build rate was very high it did not have any impact on relative house prices. They joined in the general boom. The authorities should have restrained bank lending by calling for more banking cash and capital against loans. That would have worked.
Myth Three All the empty houses are in the wrong place, so they cannot answer the problem
If you accept that most development has to take place in the crowded south-east and London, the figures show there are still plenty of empty homes even in these popular areas. In 2010 there were 650 empty homes in Southwark 586 in Harlow, 508 in Bristol, 485 in Greenwich. The South-east as a whole had 99,000 empty properties, and London another 80,000. These numbers compare with 63,832 new homes built in the first half of 2011 nationwide.
Myth Four Most of the new homes need to be built in London and the south-east
The government has said it wishes to establish greater economic balance in the UK. That will require the provision of more homes for energetic and mobile people to go to Wales or the North to set up businesses , or to expand businesses already established there. Places that have been down on their luck need to build homes for the more prosperous and upwardly mobile, so they can move in with their enterprise and spending power, to help move the local economy forward. The presence of large numbers of empty homes in places like Leeds (1433), Sheffield (874) and Nottingham (838) should be an advantage, as this should allow more homes to be made available at sensible prices quite quickly, with suitable repair and decoration.
Many of you write to me about the high level of house prices. It is certainly true that house prices in the hotspots are very high. It is also true that there are now much cheaper properties available in other locations well away from London. If the government means what it says about bringing new life and jobs to less successful areas it should be possible to bring these cheaper properties into use. With the current chill on bank balance sheets I would not expect further house price inflation. Gradually house prices and incomes will get into better balance. The government and Councils could speed this process up by selling more of their empty properties and development land at realistic prices for an early sale. House prices have fallen by almost a fifth from the 2007 peak overall, at a time of continuing price inflation generally.