Looking for house and home

You can normally get a good feel for changing political priorities by tracking how often the parties refer to particular issues over time. Search for ‘house’ and ‘home’ in the manifestos of the two main parties and, as Figure 1 shows, in 2001 neither term got much of a look-in. Today, even when we strip out phrases like ‘Northern powerhouse’ and ‘homeland security’, references to both are legion. If we quite literally take the parties at their word, whoever forms the next government looks set to give housing the prominence it deserves (and that voters clearly think it should have too).

So what exactly have the parties put on the table with respect to housing? Both Labour and the Conservatives talk a lot in their manifestos about ‘house building’. Each party acknowledges that housing supply has failed to keep up with demand for many years – and there’s a bidding war going on as to who could build more (and better) than before. The Conservatives reiterate their 2015 commitment to deliver 1 million homes by 2020 and promise a further half a million by 2022; Labour also sign up to build the magic million.

You have to applaud the ambition but after years of housing hyperbole, could this really be delivered? As Figure 2 shows, no parliament has presided over more than a million housing starts since 1987-1992 (although we did top 200,000 annual starts for a couple of years in the mid-2000s). What should give us some cause for optimism, however, is that both main parties accept (to degrees) something that Figure 2 also tells us: that the market alone is unlikely to deliver the much-desired scale. Public building – whether by councils, housing associations or directly commissioned by central government – looks set a revival, something that clearly cannot come too soon.

The manifestos are also rife with references to ‘home ownership’ and policies designed to boost falling rates. The Conservatives promise to modernise the house-buying process to reduce transaction costs; Labour (somewhat surprisingly) commit to keep Help to Buy until 2027. In the Conservatives’ eyes, home ownership would be given a further fillip by the sale of any new council homes ten to fifteen years after building. In contrast, Labour won’t seek to increase home ownership by this method and will put a brake on the sale of socially rented properties at least in the short term.

But with new analysis we published last week indicating that young families in parts of the country are only half as likely to own their house today as they were a generation ago, these proposals looks somewhat marginal. In truth both parties appear to be banking on increased housing supply stabilising house prices with the Conservative manifesto containing a bald statement to this effect. Yet past and present studies show that interest rates also play a significant role in house price booms, and that only large scale and sustained building programmes have any significant downward effect – taking us back to how much credence we give to those building targets in the first place.

In fact, each of the parties implicitly recognises that it will be some time (if ever) before home ownership levels return to peak. With many more families with children living in the private rented sector it’s good to see commitments to either ‘encourage longer tenancies’ (Conservatives) or ‘make three year tenancies the norm’ (Labour). Promises in each of the parties’ manifestos to strengthen the tenant’s hand in dealings with sub-standard landlords are welcome too.

Labour goes the furthest, however, in proposing that private rents should rise no faster than consumer prices year on year. The scope of this policy is a bit unclear – does this only apply to those on three year tenancies, for example, or is it across the board?  Whichever, what looks like a bold move may not be as radical as it seems. As Figure 3 shows, since 2005 average rents in England have either tracked or lagged prices suggesting index-linked rent rises may not provide tenants en masse with a better deal. They may help those who live in high demand areas such as London however but could hurt others in areas like the North East where rental growth is slow. It’s a sign of the times, however, that the policy is Labour’s most popular commitment and one that the Conservatives have not (as yet) condemned.

All in all, the manifestos suggest an emerging consensus on housing policy writ large. Building more houses, boosting home ownership and improving life for renters are all issues on which the two main parties agree. That’s not to say stark differences don’t exist – most obviously on the extent to which the state should get its hands dirty either as a builder or as a regulator of the housing market. But the real question is whether whoever forms the next government can truly deliver on price, quality and security for those families who aren’t just searching for the words ‘house’ and ‘home’, but who are looking for the real thing.