By Tom Bill, head of UK residential research at Knight Frank
An uneasy relationship exists between UK politicians and the residential property market, as we explored last week. Emotions have been running particularly high over the last seven days.
More details were published last week by the government setting out its vision for the private rented sector. Meanwhile, both main political parties are involved in an increasingly heated battle over boosting the delivery of new housing.
Building 300,000 new homes per year (last done in 1969) is put forward as a way of bringing down house prices. Never mind the questionable economics of that claim in a country of 25 million homes, the debate itself feels lopsided.
Over the last week, the discussion has focussed on building on the country’s green belt, which has received Labour’s caveated endorsement. Meanwhile, the Conservatives have said they will protect green space amid rows over nimbyism.
All valid topics of discussion but they ignore the fact that the delivery of new homes is overwhelmingly governed by demand. Demand is regulated by the prices set by housebuilders, which are linked to the second-hand market. These, in turn, depend on the state of the economy and the lending market. It’s nothing an Economics A-Level student couldn’t tell you.
Yet the debate has overwhelmingly focussed on more marginal supply-side initiatives.
Building more truly affordable homes of the right type in the right place is a tremendously complex issue. Which admittedly is not a great soundbite for the evening news.
Buying land at existing use value is one possible facet of the response. Such an approach for affordable housing is the subject of an amendment to the Levelling Up and Regeneration Bill, which is currently going through Parliament. Buying land at “no scheme value” was good enough for