If the price of houses followed that of inflation from 1999 to today the average property would cost £129,372.
Today, that figure is closer to £225,000 despite wages only growing by roughly 70%. In Britain today we are experiencing a housing crisis. This rise in the real value of houses is at unsustainable levels largely due to excess demand being caused by a shortage of houses. In 1999 an estimated 58 Million people lived in the UK, a figure that has now grown to almost 67 Million. Despite, this population rise the growth in housing hasn’t caught up with just net additions to the housing stock never rising above 225,000 since the late 1970s. What these statistics indefinitely show us is that in the UK we have a problem.
This shortage has led to very real problems on the ground. For example, just 38% of 25-34-year olds are homeowners, down from 55% in 2009 and the average age when people buy their first home has risen from 31 in 2007 to 33 in 2017. Thus, for many young people, it has become an unrealistic pipe dream for them to ever own their own home. The Conservatives have been most successful when they have addressed housing crises; this has been seen in both the 1950s and under Thatcher in the 1980s. Thus, if the Conservatives are to return to their rightful place as the dominant force in British politics, they must address the housing crisis we’re seeing today.
What is good to see is that many people in the party are starting to realise this. The most high-profile example we have seen recently is Sajid Javid reportedly being open to changing the stamp duty obligation onto the sellers rather than the buyers. The idea behind this does seem to make a lot of sense; only those already owning houses will be responsible for any stamp duties allowing a lower price to be paid by those entering the housing market. However, the problem with the idea is it fails to understand how sellers will react to an additional tax. Rather than just accepting lower profits from their sale, they will simply just add the tax to the price making houses more expensive. Furthermore, this tax will also discourage buying new houses, as it is effectively a transaction tax, thus discouraging transactions. This will mean that people will be disincentivised to move up the housing ladder, thus the rungs at the bottom will never open up. It can, therefore, be said that this is not the way to get more people on the housing ladder, because no one will want to move up it to free the start houses. Thankfully, it appears Javid is now retracting upon this idea, so it is becoming less and less likely to ever come into fruition.
However, several MPs correctly see the housing crisis as a supply-side and not a demand-side problem. Recently Jacob Rees-Mogg has published a paper advocating lessening regulation on the greenbelt to enable a greater amount of homes to be built, an idea that has been long advocated by Liz Truss. When people suggest building over the green belt, people are often aghast by what appears to be an attack on the British countryside. However, this is far from the case. A 1/3 of the greenbelt is intensively farmed (a net environmental damage) and it does largely just cause a leap-frog effect where “where intermediate patches of land are left undeveloped due to restrictions”. This effect is indistinguishable from what is commonly understood to be urban sprawl; this is the very thing that greenbelts are meant to prevent.
A 2015 report from the Adam Smith Institute reported that just by building around the areas of the greenbelt within a 10-minute walk of a railway station could result in a million additional homes. This wouldn’t end up taking away a significant amount of our countryside, indeed 90% of the United Kingdom remains undeveloped and just 0.5% would be needed to be built on to meet this decade’s needs to build an additional 2 million homes.
By preventing building on these areas we’re not preventing the countryside from being destroyed. Indeed, much of the green belt is already built on, acting as brownfield land. Protecting these areas is purely nonsensical and by doing this successive governments have been the cause of this housing crisis. Areas such as that near train stations should be developed; by putting green belt protection around these areas all we’re doing is increasing commuting times and increasing pollution. Thus, this appears to be a natural place to start.
This must be the first place to start when addressing the housing crisis. By allowing supply to meet the demand you will reduce housing price volatility, further incentivising foreign direct investment into the UK. This will not only help young people find a home but also increase the wealth of the nation as a whole. It is, therefore, clear that to address the housing crisis what we must do is let builders build on the green belt.