Housing Supply and Affordability: MPs' report out soon

16 June 2006

Introduction

In an important and timely report, the ODPM Select Committee (now covering the work of the new Department for Communities and Local Government) will publish the report of its inquiry into affordability and the supply of housing on Tuesday (00:01 hrs, 20 June). CPRE [1] was among around 100 witnesses who submitted evidence to the Committee during the course of the inquiry, which began last October.

Housing the nation

1. CPRE believes it is possible to meet our housing needs while achieving wider benefits, including protecting the countryside and those qualities which make places special. To achieve this, however, requires a far more sophisticated approach than that recommended by the economist Kate Barker in her review of housing supply and taken forward by the Government in proposed changes to planning policy on housing (Draft Planning Policy Statement 3). We believe a market based approach to housing supply would not only fail to deliver affordable homes to those who need them, but would cause a great deal of environmental harm – in town and country.

2. It is becoming increasingly clear that we cannot simply build our way out of what is essentially an affordable housing problem by a massive increase in market housing. Attempting to do so would:

• lead to dispersed, unsustainable patterns of development;
• increase car dependency;
  exacerbate the neglect and decline of urban areas and undermine urban regeneration;
• widen regional disparities; and
• fail to address the lack of affordable housing or reduce house prices.
  Planning benefits

3. Current Government policy on planning for housing (Planning Policy Guidance Note 3, 2000 [PPG3]) has delivered real benefits. With its focus on making better use of urban 'brownfield' sites, it has seen the percentage of housing using such sites rise to 73% and the average density of new housing climb from a wasteful 25-30 dwellings per hectare (dpha) to 42 dpha last year. This is good news for the countryside and for towns and cities which have benefited from urban regeneration as a result. It will be vital that, in addressing the crisis of affordability, the Committee's recommendations safeguard and extend these achievements.

4. More homes are being built than at any time since 1990 (163,000 in 2005/6). The number of market homes built last year (145,000) is higher than the average for the past 50 years (141,000 between 1955 and 2005). But while overall housebuilding is increasing, we are still building far too few affordable homes. In recent years construction of affordable, i.e. subsidised, housing has collapsed. On average, more than 100,000 affordable homes were built each year in the 1960s and 1970s. This fell to 44,000 in the 1980s and 26,000 in the 1990s. Just 13,000 affordable homes were built in 2003, though this rose to 18,000 in 2005 (albeit 11% of the total). Add to this the loss of affordable housing, without replacement, through the right to buy, and it is hardly surprising we have a chronic shortage of affordable housing.

House prices and housing supply

5. Simply increasing housing supply will not guarantee that homes will be more affordable since the relationship between housing supply and price is not straightforward. Kate Barker observed that even a doubling of market housing provision would not actually reduce prices (Kate Barker's memorandum to the House of Commons Environmental Audit Committee, First report of session 2004-5). Research by the Institute of Public Policy Research has thrown doubt on the robustness of Kate Barker's methodology (Meeting housing need in the South East, Working Paper Five, Commission on Sustainable Development in the South East 2005). The price of housing is hugely influenced by the wider housing market, particularly demand-side factors. New homes comprise just a small part, around 10 per cent, of homes for sale at any one time and just 1% of total housing stock.

Home ownership

6. While there are undoubtedly benefits to home ownership, we need to consider the wider costs and benefits of all types of housing. Far greater understanding of the role and value of different forms of tenure is needed. Availability of homes for rent has traditionally been important for labour mobility, while the evidence suggests there will always be some people who cannot afford to buy or rent on the open market who will require subsidised housing or cheaper market housing. A focus on extending home ownership to the detriment of other forms of tenure will not tackle social and economic inequalities or reduce poverty. Such an approach can also do unacceptable environmental damage.

The way ahead

7. CPRE believes everyone should have access to a decent home, regardless of whether they own or rent in the private or public sector. It makes no sense to plan for a massive increase in market housebuilding, however, when the overwhelming need is for more subsidised, affordable housing.

8. Housing development should not be considered in isolation, but in the context of broader objectives for conserving and enhancing the built and natural environment, delivering urban regeneration and securing sustainable patterns of development. We believe decisions about the number and location of new homes should be based primarily on considerations of local need, communities' aspirations and environmental capacity, not market demand. In a country where land and resources are scarce, it is important that homes that are built respond to local needs, in terms of their size, type and affordability.

9. Current planning policy (PPG3) was drawn up in response to problems highlighted by the Urban Task Force, namely that the wrong type of housing was being built in the wrong place leading to problems of greenfield sprawl and urban decline. With thousands of hectares of brownfield land available for redevelopment across the country and nearly three quarters of a million empty homes it is vital that we continue to recycle previously developed land and re-use buildings wherever possible. The continuing rise in housebuilding at a time when land recycling stands at record levels suggests that a 'brownfield first' approach works and is no obstacle to increasing housing supply

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