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Tuesday, August 30, 2011

More on Wales' housing dilemma

Further to my article yesterday in which I suggested that the only way to reduce the cost of housing was to build more, the National Housing Federation has joined in with a similar argument in this morning's Western Mail.

Clearly, they have an interest in this argument but that does not undermine the validity of their case. As I suggested yesterday, this is not about unchecked development. There has to be a balance. But if we don't start building new homes for sale or rent then we will continue to price local communities out of the market, add to social housing waiting lists and allow incomers to use their superior buying power to take what properties are available. That in turn will undermine the Welsh Language and local culture:

Estate agents in Wales say the country’s housing market is suffering from a shortage of new homes, with many first-time buyers still failing to get on the property ladder.

David Orr, chief executive of the National Housing Federation, said: “With home ownership in decline, rents rising rapidly and social housing waiting lists at a record high, it’s time to face up to the fact that we have a totally dysfunctional housing market. Home ownership is increasingly becoming the preserve of the wealthy and, in parts of the country like London, the very wealthy.

“And for the millions locked out of the property market, the options are becoming increasingly limited as demand sends rents rising sharply and social homes waiting lists remain at record levels.”

The Home Builders Federation estimates that there are 100,000 Welsh families on housing waiting lists, with first-time buyers needing an average deposit of around £30,000. They say that only 918 new homes were registered in the first three months of the year, compared to 1,120 last year, despite rises in housebuilding across the UK.

They want to see more government investment in affordable housing to stimulate a wider, faster economic recovery and help fix broken housing markets. Derek Richardson, the Welsh spokesman for the Association of Residential Letting Agents and director of Cardiff estate agent Squarefoot also pinpoints the mortgage market as a problem:

He said that while the housing market has been active in buy-to-let and high-end sectors, the lack of first-time buyers has had a significant impact.

“The whole market is driven by first-time buyers – it’s driven from the bottom,” he said. “There is a whole chain effect that goes to the top, but it all starts with the first-time buyers.

“The amount of deposits required from first-time buyers is beyond the reach of most people. When you’re asking for a young couple to come up with a £40,000 deposit, they just can’t get that type of money.

“Until they get into the market, the whole chain has difficulty.”

In contrast an article later in the paper compares the proposed development of thousands of new homes to the Norman Conquest and the consequent threats to Welsh language and culture.

One of the issues raised is how the targets for new housebuilding in Local Development Plans are set. The argument is that they are imposed from the Welsh Government, which I believe is correct. Presumably, the government have used the research I referred to yesterday as their guide. That leads to a lack of transparency and accountability.

It seems to me that if we are to resolve this issue then there needs to be much more local and evidence-based control over these housing targets. Only then can we get communities to buy into plans and only then can we start to deal with the affordability problems caused by the shortage of housing for certain groups across Wales, especially first-time buyers.
What about the role of buy-to-let mortgages in this? Surely one of the key planks of any housing reform has to be to outlaw buy-to-lets. All they do is suffocate the first-time buyer market and perpetuate the current cycle.

There are large swathes of urban Wales (particularly parts of Swansea or Cardiff) where young couples can't buy a market because everything that comes on the market is snapped up straight away by a landlord for an inflated fee.

Also, part of the strategy for new homes has to involve HOUSES rather than just endless flats. Flats have their place, of course, but most young couples buying their first place want to have a small house (2/3 bed) so they don't have to move again a few years down the line if/when they have children.

One final point (which relates to both of the above). Anyone who buys a property as an "investment" rather than just, y'know, somewhere to live is a prize c***.
I'm with Frank 100%!

But what I want to know is how the LDP targets were arrived at, and imposed by the Assembly when we have only just had the powers over housing transferred. I suspect that these were targets set by Whitehall, accepted unquestioned by Huw Lewis, and had more to do with projected housing need on an EnlandandWales basis than local need. English cities are overflowing, and they need somewhere for their overflow to go.
The Welsh Assembly has had most of the powers over housing for some time now. I suggest that you start with the Government research paper referred in the blog for the source of the targets. It is here: http://wales.gov.uk/docs/desh/research/100707housingdemandandneeden.pdf
Thanks for that peter, but it doesn't actually state the axioms upon which the projections are based, the base data, nor on the methodology used to produce them. Do you have that information?
No, hence my plea for transparency
Shortage, affordability, round and round we go!

First, the bleeding obvious: houses do not cost outrageous amounts to build, the cost has not been increasing. When folks say HOUSE prices are too high, they mean the cost of LAND. Introduce LVT and you get 'affordable' houses at a stroke.

Second, there is no shortage of land or builders in Wales for goodness sake!

Put the two together, let the private sector build what people want (not the public-sector barracks). And that, Frank includes build-to-let. Stop demonising landlords!

Now Peter knows all this as an ex-Land Registry man. Let's see some land-taxing powers devolved to the WAG (is WG now?)
Building more housing a la the free market model is not really going to be an option going forward. In the first instance we are going to need good quality land for more food production as the cost of importing food progressively rises.

In the second instance we will probably see the progressive rise of the "multi-generation household" as rising living costs force more and more young people back in with their parents.

The tendency over the next decade will probably be for the market to stagnate as real incomes are progressively eroded. The mortgaged housing market is built on debt, and it will be increasingly difficult for people to service that debt as real incomes erode in the face of rising fuel and food prices.

The "subprime" debacle in 2007 was an early indicator of this trend as it hit low income groups first, but it will gradually work its way up the chain to higher income groups.
So how do we achieve that? Who should I ask with an FOI?

Housing associations are not within the scope of the FOI, and since they are responsible for more and more building these days, it would be good if they were, don't you agree?
Siônnyn, if you want information regarding the Welsh Government's Housing Demand research you should FOI them.
Thank you peter - will do than. Huw Lewis's department - look out! I will also quiz Huw directly. I won't expect a reply, but perhaps it will make him think.
Is Huw Lewis the housing minister the same Huw Lewis who is AM for Merthyr but who lives up the road from me ... with his wife, the AM for, er, Torfaen?
So am I to believe that the WG sets the housing targets and then in National Park LDPs says they don't need to build as many because the parks have 'added protection'? Siop siafins go iawn!
I have read the various comments with interest. And would probably agree with most of them in the sense that I am aware we need more housing and affordable ones at that but in Wales we do not have an excess of suitable land. Therefore more and more farms are falling to the developers. Personally I feel that viewing the world populations, the food shortages, the drinking water problems, chemical pollution of the oceans ever increasing, and the absence of Father Christmas at this time, we need all our farms to be in the best of health and able to provide for the fast increasing British population. The argument of nice semi-detached housing in a nice suburb versus flats will not go away any time soon but looking at cities like Amsterdam reasonable flats 3 or 4 stories high might alleviate some of the stress.
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