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Monday, 29 November 2010

Why are British and Horwich homes so expensive?

Why are British homes so expensive? PDF Print E-mail
Written by Finlandia   
Saturday 2010
This year has seen a dramatic increase in enquiries to the Citizens' Advice Bureau and housing charities from people troubled by rent arrears, threats of foreclosure or impending homelessness, problems that look set to become more widespread as unemployment rises and government benefit cuts begin to bite.
This week, the housing and homelessness charity Shelter launched an art exhibition and auction entitled 52 weeks, "to raise awareness of the thousands of families struggling to keep a roof over their heads". The exhibition/ auction features works by Sir Terence Conran (of Habitat), Sir Peter Blake (creator of the Beatles' Sgt. Pepper album cover), comedian Vic Reeves and others.
Many people nowadays struggle to meet rental or mortgage payments on their homes, largely because housing in most parts of the country is more expensive than it has ever been.
Economists may give complicated reasons for the high cost of British housing, but ultimately it boils down to supply and demand. The fact is that as long as the number of people seeking affordable homes to rent or buy outstrips the availability of such homes, prices will continue to spiral. As a result, many of those in private accommodation will be priced out altogether, and forced to join the five million already on social housing waiting lists.

Throughout most of the post-war period, UK housing costs have risen faster than incomes, and that trend has been accelerating. People seeking homes in modern Britain are squeezed between a slowdown in construction and a rapidly rising population.
Powerful groups with vested interests in maintaining the pressure include older, wealthier home owners who for years have used their collective economic and political clout to block the building of new homes, so as to sustain the (ever increasing) value of their own properties. Under bogus banners of environmental or social concern, these NIMBYs ("Not In My Back Yard") have campaigned against proposals that might threaten house prices, and have withheld support from politicians and parties who support house-building programmes.

A second interest group is made up of private landlords, some of whom have exploited their freedom to extort unemployed and low-paid people, whilst paying scant attention to the quality or habitability of the accommodation they offer. (Anyone who has spent time looking for rented accommodation in one of our larger towns or cities, and seen some of the overpriced dumps that constitute the majority of private rentals at the lower end of the market, will know what I am talking about.)

But most of the blame must be laid at the door of successive governments, who have known about the shortfall in affordable housing but have done little about it. They have failed to control the excesses of unscrupulous landlords, and (most deplorably) have failed to control immigration, which has increased the competition for scarce housing at the same time as depressing wages, making it doubly difficult for many British citizens to afford a decent home.
The crisis in housing has hit the young  especially hard, and many young couples earning average, or below average, wages have had to put family plans on hold for years, whilst they try to obtain social housing or save a deposit for a small place of their own.

The government says that it will increase the number of low-cost homes built, and that it will generate extra money for this by raising the rents of many existing tenants. However, a report by Shelter called Forgotten Households has shown that government subsidised "affordable housing" schemes have benefited developers and high-middle income earners more than people on low incomes. According to Shelter:
"The average wage of households accessing low-cost home ownership is between £28,000 and £32,000, significantly higher than the national average wage of £21,700 and completely out of reach for households earning an average of just £16,000 a year."
Doubtless part of the present crisis is due to social changes that have created lots of single households. But a much greater problem is that of our ever-expanding population, as was highlighted last month by London Mayor Boris Johnson:
"… the population of the UK is set to rise by an incredible 10 million over the next 20 years.... Thanks very largely to Labour's deliberate failure to control immigration, and to higher birth rates, the Big Society is about to get very big indeed.... We already have huge waiting lists for social housing. On the private market the average age of a first-time buyer has now soared to 37... and we have desperate problems of overcrowding."
Johnson predicts that when the economic eventually starts to recover, the housing shortage together with a rapidly rising population will cause prices to "spike more viciously than ever", leaving young people even less able to buy. He acknowledges the need "to increase the supply of affordable homes", but fails to acknowledge the other part of the equation – namely the need to stop, or at least drastically reduce, the flow of immigrants. We shouldn't be surprised at this – after all, it was Boris who only a couple of years ago called for an amnesty for the hundreds of thousands (more than a million, according to some estimates) of illegal immigrants in Britain. (Does anybody still believe that this man's buffoonish persona conceals a sharp intelligence?)
Figures released this week by the Home Office show that immigrants have been taking jobs that unemployed British workers are qualified to do, providing further evidence (if it were needed) of the hollowness of economic arguments for unrestrained immigration, and of British employers' greed for cheap foreign labour. If the government were rational, it would tackle the present housing crisis first by reducing demand – in other words by halting mass immigration – before it starts covering more of our countryside with concrete.
There are certain basic things that we should expect of a civilised society. They include physical security, food and clean water, and a decent home. I would say that when a government neglects its duty to secure these basics of life, then it begins to lose its claim to legitimacy.