Build, baby, build

It looked as if it had once been a large house of entertainment; but the roof had fallen in, in many places, and the stairs were steep, rugged, and broken.

In today’s least surprising news comes the headline at the top of The Times App: “Labour will miss 1.5m new homes target, housebuilders warn”. Another contender for the BMJ’s No Sh*t Sherlock Award 2025.

Apparently, housebuilders have told the Office for Budget Responsibility that it is overly optimistic about future economic growth from housebuilding. This is something that the Construction Product Association Forecasts, released on Monday, would seem to bear out.

Sales of newly built homes are currently at their lowest level for 15 years. Not since the deep, dark days of the global financial crisis have we seen figures as low as this, according to estate agency Savills. That also, by the way, incudes the Covid pandemic days, themselves pretty deep and dark, when we couldn’t go anywhere or see anyone. Unless you worked in Downing Street. But that was, as the saying goes, in another country, and besides, the wench has moved on to pastures new and more lucrative.

Housing secretary Steve Reed may well be repeating the mantra of his predecessor Angela Rayner, Build, Baby, Build, but it won’t work if no-one wants to buy what’s built. Or, more accurately, if they are too scared by all the noise about what might be coming in the Budget. Not helped, it has to be said, by the rumours in the mainstream media.

The Treasury also disagrees with the OBR, except it thinks that the forecast is too pessimistic, and wants it to re-do it in a more positive light. The chances of that happening are somewhere between slim and none, especially following the Home Builders Federation letter to the OBR.

There’s been a lot of hot air from Westminster – from this Government, and the previous one – about simplifying the system so that building is made easier, more efficient, less held up in Jarndycean planning committees… yada, yada, yada. However, one fundament truth remains, that housebuilding isn’t just dependent on the will and the ability of the housebuilders, big and small to build. It is dependent upon the will and ability of people to buy and move into those houses. The rate of purchases of new homes is pretty low at the moment and it won’t increase unless the potential customers feel that they can afford to do so, now and in the future. That nasty shock felt by people unfortunate enough to come off their low fixed rate mortgages in the wake of the Liz Truss/Kwasi Kwarteng economic experiment isn’t something they are going to forget in a hurry.

It is also dependent on having the skills and manpower to do the actual, you know, building. Skills shortage….oh, you know the rest. That, however, is probably a topic for another rant.

I’m a great believer in the power of positive thought, but just saying you want to get 1.5m new homes built won’t make it happen. You’ve got to understand what holds the market back, what will make the market grow and put measures in place, proper measures to ensure that it happens. In the next 45 months. When you put it like that, it really doesn’t seem like they’ve got long does it?

As usual, The CPA’s Noble Francis explains all this so much better than I do.