Lord Kerslake: Home truths needed to fix a broken housing market

IF you ask what issue is occupying the thinking time in Whitehall and Westminster at the moment, the answer is simple. It is Brexit. In the Lords, we are quite literally kicking our heels waiting for the major Brexit bills to reach us. I call it ‘waiting for Brexit’.

But if there is one issue that stands a chance of breaking through the smothering Brexit blanket, it is housing. I think this for three main reasons.

Firstly, the very real issues of affordability and access. Secondly, housing now symbolises the generational divide between the asset-rich baby boomers and the opportunity-poor millennials. And thirdly, the shared political view that the housing market has stopped working and now requires the government to intervene heavily.

In 20 years, house prices have boomed. The median house price paid for a home in England rose 259 per cent compared to earnings, which rose by just 68 per cent.

Home ownership has fallen, with the percentage of owners at a 30-year low of 63 per cent, down from a peak of 71 per cent in 2003. For the 25-34 year olds, the figures are even more stark, with 38 per cent owning their own home, down from 57 per cent just 10 years ago.

Dig a little deeper and the story becomes more complex. After taking account of inflation, residential properties are selling for less than in 2007 in almost 60 per cent of wards across England and Wales. That figure is 92 per cent in Yorkshire and the Humber. But whatever part of the country you go to, young people have been the losers.

We face the almost unique prospect of current and future generations being less well off than their parents. This is true of earnings but is starkly true of assets like housing. According to the Resolution Foundation, baby boomers now own 50 per cent of the wealth compared to just two per cent for millennials.

For nearly all my time working in politics, this growing generational divide seemed to have almost no political consequence. Conventional wisdom was that whilst young people might well have views on a range of issues, they were less actively involved in party politics and much less likely to vote.

However the last election dramatically changed that story. The Labour Party demonstrated it was possible to mobilise young people to decisive effect. All parties are now rethinking their political strategies accordingly. And at the centre of this rethink is housing.

Housing is also at the centre of a wider argument about inequality, symbolised by the debate which followed the terrible fire at Grenfell. It brought into stark relief the divide between the haves and have nots in a very affluent part of London.

Housing is also at the centre of the debate on welfare reform. Housing benefit is proving the most troubling of the six benefits going in to Universal Credit. The freeze of Local Housing Allowances and the effect of the benefit cap are likely to have an even bigger impact. Shelter has calculated the combined effect could drive hundreds of thousands more in to homelessness.

I came in to housing in 2007 when I took up the post as chief executive designate of the Homes and Communities Agency. The Agency came into being at pretty much the exact point the housing market fell off a cliff. New housing supply more than halved and many of the biggest housebuilders nearly went under.

Over the 10 years since, Government funding has been pumped in through help to buy, larger housebuilders have restored their balance sheets and the planning system has been radically overhauled. According to a recent report by estate agents Savills, the Government is on track to deliver its target of one million new homes by 2020.

The honest truth, however, is that we have only just recovered to the rates of build delivered prior to the crash. We are still way below the estimated 250,000 to 275,000 homes a year required to meet what the country needs.

What is clear to me from my years in government is that much of the thinking on housing is irredeemably short term. We need a longer term plan that straddles market cycles and changes in government. Decisions on housing also need to be based more on evidence.

This brings me to the new Collaborative Centre for Housing Evidence (CaCHE), an ESRC-funded project designed to inform future UK housing policy.

It is one of the most important initiatives in evidence-based policy making I have seen in my career and will have a profound impact for years to come.

I am delighted to have been asked to chair the International Advisory Committee and equally pleased that both the University of Sheffield and Sheffield Hallam University, of which I am Chair of the Board, are CaCHE partners.

Housing is an endlessly fascinating subject that has rightly risen up the political agenda.

By common consent the housing market is not working – but we are much less clear about the solutions. We are much more likely to take the right steps if we base our decisions on research and evidence.

* Lord Bob Kerslake is chair of the Board of Governors at Sheffield Hallam University.