Social housing boss, Sir Bob Kerslake, signalled a retreat from the government’s 3 million new homes by 2020 target, as reported in Building today. No surprises there, you may think, as housebuilding has been hit for six by the economic downturn and it looks as though completions this year will be at their lowest for a long long time, just at the point in time when they should be powering ahead — if those targets were ever to be met.
What caught my interest that about this story was not so much that the targets were under review but that Kerslake gave a new reason for the existence of the targets in the first place.
He said that it was still vital that the government hit its housebuilding targets in order to prevent the growth of a society of haves and have nots.
Up until now, the justification has always been that there is a terrible housing shortage and that young people can’t afford to get on the housing ladder. Now that justification is beginning to look rather thin: if there was such a terrible shortage of housing, why would prices be falling?
Now the reasoning seems to have changed to one that sounds more like a method of wealth redistribution. But this is still assuming that home ownership remains a means of becoming wealthy, which is what Thatcher originally espoused all those years ago. If the credit crunch is telling us anything, it’s telling us that the old ways of thinking about home ownership, and in particular the gearing effect of mortgaging yourself to the hilt in order to get rich, are kaput. It’s now rather more likely that, once the dust has settled and house prices have found a floor, we’ll experience many years of what Germany has been seeing ever since reunification – stable house prices. More particularly, the land may hold its value but the house itself becomes a depreciating asset, rather like a car. In which case, the gap between the haves and the have-nots may not be quite as far apart as Kerslake suggests. And the rationale behind building 3m new homes looks even weaker.