It’s curious. The biggest single issue to come up time and again in MPs advice surgeries and casework is hardly ever mentioned during election campaigns and barely registers in the acres of print devoted to political comment each week. And yet it’s the biggest item of expenditure for most people under pensionable age, takes a very large slice of monthly income, and probably causes more worry and concern than almost anything else.
That issue is housing. The fact is that very many people cannot afford, or cannot find, housing of any kind in their immediate area. Many are living in wholly unsuitable accommodation, trying to raise families in flats or houses far too small to give even a basic semblance of privacy, and many are in private rentals in very questionable conditions. Most worryingly, it is almost impossible for many young people to find a house they can afford as the first step on the housing ladder in the area in which they grew up. That is particularly true of people in rural areas, where the chocolate box attractions of village life preclude all but those with substantial resources buying into the cottage dream.
The difficulty is highlighted by a current advertising campaign dreamt up by the homelessness charity Shelter, which is on posters all over London at the moment. It shows everyday articles of grocery shopping, alongside the price-tag if retail costs had risen at the same rate as inflation in house prices over the last forty years. A pint of milk would cost £2.43, a jar of coffee £20.22, a packet of soap powder £28.53 and a chicken from the freezer cabinet £47.51p. All in all, they estimate, the cost of the average grocery bill would be £420.00. Thank goodness that even with inflation it’s not quite that bad.
But that is exactly what has happened with house prices. It is amazing , and quite difficult to recall, that in 1971, according to Shelter, the average price for a house in Britain was just £5,632. In Somerset, according to recent figures, it is currently £241,930. That’s a multiple of nearly forty three times, well beyond even the forty times the Shelter figures show.
Of course, it always looks shocking when you show the effects of inflation and you calculate the difference over that sort of time-frame. But the difference here is that whereas retail inflation is at least of the same order as increases in average wages, house price inflation isn’t. It’s gone well beyond. Of course, houses are different to groceries. Firstly, you have an asset. A pint of milk after forty years will not be something you will be able to sell at a profit or bequeath to your children. A house is. And of course most people don’t buy houses out of their current income. They mortgage, sometimes over very long periods. But the ratio between average wages and average house prices is what determines affordability, and for a great many people in this part of the country nowadays, houses simply aren’t affordable.
The reasons are many. Selling off council housing was a very popular policy at the time, but the major criticism was that the proceeds weren’t re-invested in more social housing, so the availability of rented accommodation became markedly less, particularly in our villages. The lending policies of mortgage providers was also key. The old rule of thumb was that lenders would work on a basis of three, or at most four times, annual income. In recent years that went out the window, with multiples of seven times income not uncommon, and some lenders, such as Northern Rock, notoriously lending 125% of the property value. No wonder house prices went up. And of course for those who had already purchased property, that seems a good thing, in that they have a hugely appreciating asset. That’s why people get so worried when, as now, there is dip in the market, and they run the risk of losing asset value or even negative equity.
But none of that helps the poor first time buyer unless there is a ready supply of affordable housing in their area. And of course there is not. When big developments have gone up over recent years, far too often they have been for “executive town houses”, well beyond the reach of many local people. Even modest schemes in villages, schemes often identified by local people in village plans and the like as top priorities, have been few and far between. And often there has been a confusion between the quite proper desire not to have huge estates entirely changing the character of a small rural town, and those who oppose any development, however necessary, on the grounds that, having moved in, nobody else should.
It’s not surprising that a recent report by the “Rural Advocate” highlights the number of young people who leave our rural communities. They are forced to, because they can’t afford to live where they were brought up. That’s not healthy, and it’s something we should address. The key must be small and sympathetic provision of rented accommodation or affordable property to buy, even in small villages. It can be done without changing the character of a village, but often either the developers want too much or the locals too little. It needs planning policies which promote this – and congratulations to South Somerset DC on adopting plans which do exactly that. But most of all it means recognising that we have more young families, that they need houses too, and sending them off to the nearest grotty area of a big city is not the answer.