Housing market intelligence conference 2010
This was published under the 2010 to 2015 Conservative and Liberal Democrat coalition government
Transcript of the speech as delivered. Introduction What would an intelligent Housing Market look like? Quite simply, it would be a market…
Transcript of the speech as delivered.
What would an intelligent Housing Market look like?
Quite simply, it would be a market that met people’s aspirations:
Maybe to buy their own home;
Or to live close to their family and friends;
Or to move to find work.
That’s not the market we’ve inherited.
By presiding over a system which saw house prices double in just ten years, the last Government ensured that buying a home was out of the question for the vast majority of wannabe first time buyers.
With a house now liable to cost perhaps seven times someone’s earnings, it’s no surprise that the average unsupported first time buyer is 37 years old.
This country is in danger of letting down the aspirations of yet another generation if homes do not become more affordable in the long term.
House price stability
So what is required now is a period of house price stability.
House price booms keep people out of the market.
And house price busts mean people’s homes are worth less than they paid for them.
It’s a market where today’s expert tells you to “hold on folks, cos prices are gonna fall”.
But don’t be surprised if tomorrow’s expert tells you that “now’s the time to buy to make a killing” as house prices resume their upwards march.
It might even be the same expert! It will definitely be from the same newspaper!
Now I’m fully aware of the dangers of talking about the end of boom and bust.
But I think we need a market that’s, well, boring. Where things are really quite predictable.
Where the pressure of making what could be the single biggest financial decision of your life, is based on your needs and desires, not on whether you feel lucky.
Buying a home shouldn’t be like playing the lottery.
Sometimes it seems like we’ve all forgotten what our housing market is actually for.
To provide a roof over our heads.
A home where we feel safe, comfortable and happy.
Somewhere we can bring up our family or live alone.
I have a simple ambition.
An ambition for a period of house price stability.
This would provide a stable business environment for the building industry.
A market that means the industry can contribute to a sustainable economic recovery.
Of course I understand that market conditions don’t exactly match this picture at the moment.
The economic legacy we inherited has made things very, very difficult for you and will do so for sometime.
Cutting the deficit
But we must look at the bigger picture and cut the public deficit.
We will abolish the structural deficit in this Parliament and we plan to make rapid progress towards that goal.
And in case you think deficit reduction is all pain and no gain you should ask Martin Lewis, the money savings expert. He pointed out yesterday that the cost of tracker mortgages fell to a record low during September as competition continued to return to the market, because deficit reduction promotes lower interest rates.
So it’s really important that we keep interest rates low and improve credit availability for first time buyers, house movers, landlords and yes, housebuilders.
Cutting the deficit not only creates the right conditions for banks to lend to prospective home-buyers, but also better terms for housebuilders.
As a business man I know the personal investment and the hard work that makes for success.
And I wouldn’t want that success to be threatened by interest rates rising quickly.
And, yes, the need to address the deficit means that the level of public expenditure will diminish.
This audience already knows that.
You know that the old assumptions have gone and if you are still in any doubt you will only have to wait til next week.
You didn’t have to wait that long for us to scrap housebuilding targets.
Of course we must build more homes.
The ‘demographic imperative’ demands it.
But attempting to impose supply on local communities from the centre failed you, and failed those communities.
It makes a good headline to say that the abolition of targets has meant X fewer homes being built.
But it’s a lazy headline
Because the numbers just don’t stack up.
It’s a false comparison - the targeted number of homes was simply never going to get built.
The communities they were imposed on were already making sure of that through judicial reviews, and being very vocal in their opposition.
Targets actually set neighbourhoods against development.
All the community saw was central Government imposing, and the community fought back.
Instead what neighbourhoods need are incentives to accept new homes.
And that’s where the powerful New Homes Bonus kicks in.
Communities could see reductions in council tax, or a redeveloped town centre or a new community centre in compensation for accepting new homes.
When the previous Government imposed a 10 000 home target in my constituency I led the No Way to 10 K campaign.
Revealingly all the political parties joined in.
Frankly, they had no alternative if they wanted to genuinely represent their community.
But what if the communities could see the benefit?
If the regeneration of Hatfield’s tired town centre could be paid for through the New Homes Bonus?
It would transform that debate.
Incentives will be a powerful driver of an intelligent market.
But for the private sector to respond to that driver it must be set free from unnecessary regulation.
Complexity of regulation
So as we cut public expenditure, we will also cut state interference.
As you know HIPs are already history, for example.
Today I can announce I am intent on further reducing the burden of regulation.
I will make sure any regulation must be cost-effective and proportionate - driving down unnecessary expense.
You will have heard this before, but the difference is that we really mean it.
Just as we are serious about cutting the deficit, we are serious about reducing regulations.
Of course, Building Regulations will continue to set a national minimum requirement for all new homes to make sure they are safe and help us reach our climate change targets.
But we have already launched a review of the Building Regulations to identify where we can ease the burden on industry.
I know that Building Regs are not the only burdens: over time, the housebuilding industry has been asked to deal with a growing number of additional standards.
CABE have produced a simple diagram to explain how the various regulations, codes and standards relate to each other.
Of course this audience understands this diagram perfectly!
But to others it is a complex web of duplication, contradictory requirements, multiple points of assessment and compliance.
We will work hard to reduce this burden but we will need your help.
Commitment to reduce burden
I applaud the constructive way you are engaging with us to meet the zero carbon challenge.
Many of you will be working with the Zero Carbon Hub to test the appropriate carbon compliance level.
We are exploring the option for developers to meet further obligations through payments to fund local energy projects.
I will want to consider carefully the costs and benefits of continuing to have different standards for social and market housing.
I can also promise that we will keep planning requirements to a minimum.
Reducing the truckloads of paperwork required for a planning application.
There will be no more mad dash to hire a three ton truck to deliver planning documents as the deadline draws near.
Because what we want is a market where councils and housebuilders are free to act in the interest of local communities.
We will reduce the burden of regulation.
We will provide a powerful incentive that works.
We will free communities to demand that you build more homes.
We will do our bit.
In return we want you to do your bit.
To get out there and sell the benefits of new homes.
Not just to prospective home buyers but to the whole community, through the New Homes Bonus.
To make the market more intelligent the existing population must see the benefit of new homes.
Show them what the incentive can buy - what they can get for their money.
Together we can make localism work.
Together we can create the intelligent market we all want.