Crawley Observer Column, Wednesday 18th May 2016

The cost of housing is one of the biggest concerns in Crawley and the passage of the Housing and Planning Act last week will only make the problem worse as Government continues to fail to understand the nature of the problem.

House prices are determined by supply and demand. While the UK’s birth rate has stabilised at two births per woman the population continues to grow, immigration plays a part but so do increasing lifespans. For every extra year of lifespan the population grows by a year’s worth of births and since WWII average lifespans have increased significantly, while cultural changes mean people also live in smaller households. All this has increased the demand for housing.

The immediate post-war Labour and Conservative Governments took housebuilding seriously, but since the 1970s the number of completions under both parties has not only failed to keep pace with increasing demand, it has actually declined. With demand so greatly outstripping supply it’s little wonder prices have shot up. We have forty years of housebuilding to catch up with, the scale of building now required is almost beyond belief.

It gets worse. Land, not capital, is the most scarce resource when it comes to housing. Local Plans only allocate enough land for housing to meet the estimated local demand and that scarcity means developers have to outbid each other to secure the few allocated sites. This forces prices up, requiring developers to work backwards from the most they can make, deducting costs and their profit margin to produce the maximum figure they can bid for the land. The national planning system effectively designs-in high house prices.

There are two ways of solving this. The first is to liberalise the market by allowing developers to build whatever they want, wherever they want. The South of England would be concreted over but you could definitely afford a house. The second is for Government to play a more active role in housebuilding. Unfortunately only councils are currently working to do this and the Housing and Planning Act further weakens the powers and funding available for us to succeed.

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