Ok, so it is August, I just had my birthday (yesterday… you may send cake to my office) and my birthday always marks the beginning of “Silly Season”… (no sniggering, it is mere coincidence).
So, Nationwide just announced that house prices on average have fallen by 3.8%… the biggest drop since July 2009 before the 2010 General Election where (and let us not forget) David Cameron and the Conservatives put the “Housing Crisis” on the map as a central part of their election manifesto… oh how time flies to where we are now!
Then there was an article saying that people on £30k a year don’t actually earn enough to be able to pay for an affordable rented flat… so clearly something is seriously wrong somewhere.
Now, for the past 13 years we have all seen and lived the NPPF, the Local Plan process, and the Localism Act, where we were encouraged to build more homes because we don’t have enough homes and the homes we do have are so expensive, the majority of people under 45 are trapped in the rental sector.
But what happens if we do, hypothetically, have a new Labour Government who cuts through the red tape, and we reach or even exceed the 300k new homes a year? (There has been talk of that target going up to make up for the shortfall.) The current price drop is, ironically perhaps, ascribed to the interest rates where people simply can’t afford the silly prices that no one can get mortgages for, and therefore the market forces are driving prices down.
Picture this: Sicily 1925, a young girl buys a house for £100… no, no hang on, I am channeling my inner Sophia Petrillo from Golden Girls again!
Picture this: We build more new homes than there are buyers for. The developers can’t shift them, as everyone who can get a mortgage at the prices they are charging has already bought a new home and now there are no more buyers… The sales office looks like a Tombstone in the Wild West with tumbleweed rolling through it. What do we do then? Do we lower the prices in a “grab a bargain sale”, or do we sit on dead assets until the market picks up again? What if the housebuilding continues and the market doesn’t pick up again… i.e., the market gets flooded and demand evaporates?
And let’s be honest, chaps and chapesses, that is our collective real goal… it is supply and demand, if the supply is so big that it meets and exceeds the demand, we would have succeeded in our moral obligation, but we’ll all be in the dole queue.
So, the question is: do we do what is morally right even if we render ourselves obsolete to the economy?
Answers on the back of a postcard addressed to me!
Henry