Pledge to build homes at a rate of 200,000 per year is far below current delivery
Depending on the result of the general election, the publication of the Conservative Party’s manifesto yesterday may well mark the point at which the political arms race in promising ever higher housing numbers ended.
Building a million homes would actually represent a significant drop in the current rate of home construction
Because, if you spend a second unpacking their manifesto section on housing, it seems quickly apparent that the Conservatives’ ambition on housing numbers is starting to wane. Yes, the 300,000-homes-a-year target has not been ditched – but the wording is tricksy enough to mean it will clearly not be regarded as a concrete manifesto pledge. This is because while it promises continued progress against this target, it only vaguely says it will reach it by the mid-2020s, which can clearly be read to mean after the end of the next parliament in 2024 – beyond which all bets are off.
The actual concrete pledge, then, is just for a million homes in the next parliament. Now, while a million is clearly a lot of homes and – most importantly – sounds like a lot of homes to the average punter in the street, those in the industry will know it equates to no more than are being built now.
One million homes implies, of course, a delivery rate of 200,000 homes a year across the parliament. But the most recent net additions figures – the government’s preferred measure – hit 240,000 for 2018/19. So, building a million homes would actually represent a significant drop in the current rate of home construction, even though almost everyone in the sector describes the status quo as inadequate.
It also represents a clear reduction in the commitment made in the 2017 manifesto, which implied a delivery rate of 250,000 a year.
General election 2019
This pledge then stands in contrast to the trend seen in recent years, in which the inflation in aspiration in this metric has been rapid, to the clear benefit of the industry. Less than five years ago, the Liberal Democrats’ promise to build 300,000 homes a year was largely mocked for being utterly unrealistic – at a time when the 200,000-homes a year being promised by the Conservatives was seen as pretty optimistic.
In May 2017 the Conservatives pledged to build 500,000 homes in the two years from 2020, which then-communities secretary Sajid Javid upped to 300,000 homes-a-year before the end of 2017. While Javid’s target has not been dropped, under Boris Johnson the rhetoric around it has been dialled down, while the rhetoric around protecting greenfield and green belt sites and housing quality has been dialled up.
So why is the ambition seemingly going down? Firstly, the market is clearly not in the best shape, with starts sharply down this year – though the extent of the problem outside of London is much debated – and the Conservatives are likely to have been wary of making a concrete promise that would turn out to be undeliverable. And while Help to Buy has so far protected the new build sector from the pretty moribund second-hand sales market since Brexit, senior Conservatives will likely have been wary of the impact of cancelling Help to Buy – as is still planned – from 2023.
But the other issue, which is potentially more concerning for the sector, is that there are signs that housing is slipping slightly down the domestic political agenda.
Lobbyists now say housing, after a period of unprecedented focus, has slipped off the top three list of domestic priorities, partly consequent of a period of much more modest house price growth – at least in the parts of the world where those setting the political agenda live. There is also a sense that the arguments, made by the likes of economist Iain Mulheirn, that housing supply overall is not the cause of the affordability crisis, is gaining ground. In a sense, in fact, Labour have tacitly accepted this for some time – their numbers pledges are around units of social housing, which tackle affordability much more directly than units overall, rather than homes in general.
Hence, in part, the Conservatives will have made this more modest pledge because they think they can get away with reducing the ambition – instead concentrating their firepower on areas like the NHS that face much more media scrutiny. It is now up to the housebuilding sector to ensure that the importance of delivering new homes doesn’t slip further off the agenda.