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Good for the country?
Published 10 March 2024
The house buying frenzy was spurred on by a belief in effortless riches – until it all came crashing down. By Shaun Spiers
There was a fascinating piece on Ireland’s housing hangover in a recent issue of the London Review of Books. The novelist Anne Enright describes the ‘new housing estates that litter the countryside, unfinished, derelict, unsold’, and how people in their 20s and 30s ‘were panicked into buying a house, any house, in some distant field, at a price that was increasing every day they delayed’.
It was ‘impotence and panic that drove Irish people to buy overvalued houses towards the end of the boom; it was the feeling that we were running up a down escalator and had to grab hold of whatever we could, to stop being swept away’.
But the buying frenzy also had a rational basis. Home ownership became the path to effortless wealth. People felt rich or poor not because of the money they earned, but according to how early they had got on the ‘property ladder’ and how high they had been able to climb.
Enright makes clear that it was policy that brought about ‘the builders’ boom, which turned into the speculators’ boom’, not any planning restrictions or shortage of land. And so it was, very largely, in Britain.
This is not to deny that the country has a shortage of homes, or that measures are needed to prevent rapidly rising prices in the medium to long-term. But it does suggest that the exclusive focus on ‘supply-side solutions’ to high prices – the policy of cajoling half a dozen big housebuilders to build houses in order to bring down prices and, er, their profits – was wrong.
The principal aim of policy came to be not ‘a decent home for everyone’ but ‘less unaffordable homes for some people’. Politicians worried about high house prices and the plight of young people unable to get on the ladder. But there was a marked reluctance to take measures that might quickly depress house price inflation, such as a capital gains tax on first homes, a property tax reflecting shifting values, or the inclusion of house prices in the barometer of inflation.
If we do not learn lessons from the recession, we will be in a new housing bubble before too long, with the same problems as before. A new way of thinking would start by banishing the term ‘housing ladder’, which suggests that one should always be climbing up, owning a bigger and better house not because it is needed or even wanted, but in order not to be left behind.
But can we shift the way we think about housing and, in particular, home ownership? We at the Campaign to Protect Rural England certainly hope so. There are good social and economic reasons for questioning the desirability of ever greater home ownership driven by successive booms in house prices.
That is why our optimistic vision for the countryside in 2026, our centenary year, rests partly on the idea of governments aiming for a stable housing market. In 2026, our vision says, ‘property is no longer seen principally as an investment. Homes are places to live’.
A stable housing market would mean that people were not disproportionately enriched through home ownership. Most people would probably still want to own a house, but many would want to rent, at least for periods of their life.
Of course, this is difficult terrain for politicians, particularly in the run-up to an election. But, encouragingly, the government appears to be rethinking its commitment to an ever-increasing number of home owners. In December, housing minister John Healey made a thoughtful speech to the Fabian Society in which he acknowledged that home ownership has declined during the past decade and said: ‘I’m not sure that’s such a bad thing.’
He proposed giving renters financial benefits comparable with those of home owners, such as through tax free savings vehicles or ‘a bond for renters to build assets and store wealth as homeowners do’ – proposals that would have the effect of dampening housing demand.
The response from Healey’s Tory shadow, Grant Shapps, was discouraging (‘Housing minister confirms that if you work hard, save hard and have aspirations for your family – Labour no longer for you’, he tweeted). But I am optimistic about the long-term prospects for a mature debate on housing needs.
This is not just because the Liberal Democrats have also emphasised the need to take steps to avoid future housing bubbles. More profoundly, it is because the way we have ‘done’ housing in recent years has been a disaster for the economy, for those in housing need, and even for those families who have seen the values of their properties rise and their children unable to afford more than a (badly built) rabbit hutch.
The debate is now starting. When the new government, whatever its composition, looks seriously at housing, I am confident that it will work hard to avoid yet another damaging housing boom.
Shaun Spiers is chief executive of the Campaign to Protect Rural England.
