A couple of newspaper headlines caught my eye recently. The first, in the London Evening Standard, had the boss of Telford Homes calling for post-election planning freedom to tackle the capital’s acute housing shortage. Good on him, I thought. That was until I read the next two paragraphs, which said Telford managed to sell two-thirds of its Manhattan Plaza development despite the uncertainties created by the general election. The article goes on to crow that Chinese and Hong Kong investors snapped up most of the flats.
The next article, in Construction Enquirer, reported on communities secretary Greg Clark’s call to speed up the release of surplus land and property. Clark says: “The scale of our ambition is clear – to release enough surplus and redundant public sector land for 150,000 homes over the next five years… I want to see it… turned over for house building.”
Investors in Hong Kong and China must be drooling at the prospect of all this property coming on to the market so that they can lodge their money in a safe place.
"Investors in Hong Kong and China must be drooling at the prospect of all this property coming on to the market so that they can lodge their money in a safe place."
Normally when you increase capacity in anything, prices become more competitive. But a lot of this property is either unoccupied or used as a pop-in place when in town. With global uncertainty London property is an even better bet these days, so in real terms supply is being choked. It does beggar belief that most of the large-scale developments will rarely end up housing genuine locals.
The third headline, in the Daily Telegraph, was about the 3.3 million over-55s stuck in oversized homes, leaving 7.7 million bedrooms unoccupied. If they could find properties to downsize, it would unlock 18% of the property market. There is increasing recognition, says research by Legal & General and the Centre for Economics and Business Research, that there is not enough supply.
At the end of the day, the housing business model needs changing. Rather than sell off land for developers to make excessive profits with little social benefit, just pay builders to build under contract – and constrain the market to avoid the excesses that are beginning to happen.
Affordable housing is a misnomer. Anything is affordable with the money of the Emir of Qatar, who recently paid £50m for a Mayfair property. We need reasonable cost, good-quality housing within the reach of average people. The house building oligarchs seem to be on a different page altogether.
