I have a few observations on ‘levelling up’, last week’s elections and today’s Queen’s Speech from a property development perspective.
First of all, last Thursday’s elections once again highlighted the importance of homeownership for Conservatives wishing to win. In Hartlepool, which went Conservative last week, 60% owned their own homes according to a 2011 study quoted in the Times. In the 2019 elections, Resolution Foundation analysis found of the seats won by the Conservatives, homeownership levels were at 54%. Of the seats won by Labour, 43% owned their own home.
Secondly, borrowing from astronomy there is a ‘goldilocks zone’ in which the Conservatives seem to have a good chance of winning. Data from the Economist highlights in areas where the Conservatives are enjoying most success, the house price to earnings ratio is oscillating between 4 and 6 x salary. From a property perspective, such areas could be termed lower middle market. By that I mean they are not poor areas and people are in touching distance of getting onto the ladder – most people can borrow a multiple of 4.5 times their salary to get a mortgage. It is such areas where policies such as Help to Buy can have a very significant impact. It is these areas which cover much of what is known as the Red Wall.
Thirdly, and now I am generalising a little, the Red Wall areas possess quite different politics to more traditional Tory shires. This was why the Tories quickly dropped the ‘mutant algorithm’ in the Planning White Paper. Such a housing methodology would put more homes into rich areas which certainly needed more homes but may have also upset quite a number of Tory voters. It’s now considered better to try and put new homes into ‘middling’ areas where the politics of planning is a less acute. This is clever politics. It creates a Tory coalition of aspirational areas and more established areas and pushes Labour out. Unfortunately, it’s not clever housing policy: it doesn’t address the nation’s structural housing issues, only particular areas.
Fourthly, let’s not kid ourselves about housebuilding in the UK: we are rubbish at it! We have had a Conservative Government in some form for over a decade and it has not been effective. In 2018, Britain completed 225 new housing units per 100,000 inhabitants. The equivalent figure was 40% higher in Denmark, 60% higher in Germany, 70% higher in the Netherlands, 100% higher in Belgium, 170% higher in Norway, and 200% higher in France. The tanker is going to take a long time to turn. Whilst some of the reforms in the Queen’s Speech are very welcome it has been watered down and doesn’t go far enough to address putting housing in areas where it really is acutely needed.
Fifthly and finally, it all leads me to think that the Government may about turn on Help to Buy. It gets them political results. Reforms to the planning system take time, perhaps many years and Governments think short term even if they have been the ruling political party for over a decade!
