Housing is now the biggest domestic public policy failure since the Second World War. A broken market that doesn’t meet the needs of middle income households, rising prices that see little response in supply of new homes and, if we’re honest, politicians who seem incapable of making a difference.
The starkest mismatch between supply and demand is in home-ownership. Most people want to own their own home, but the number able to do so is in freefall – with young people hit hardest of all.
New figures that I release today show that the number of home-owning households headed by under 35s has fallen by over a quarter of a million since 2010.
This affects young people across all social classes. Even home-ownership amongst young people in good professional jobs has slumped, down 150,000 in the last five years.
But the biggest percentage fall has been young working class households – down a fifth in five years and now only one in five under 35s in manual jobs own their own home.
In the absence of any leadership from Westminster, a rift is opening up between the housing haves and housing have-nots – where those on the highest incomes, or with wealthy parents, get the security and financial gains of home ownership, while those on middle and lower incomes are locked out.
Under Labour in government a million more households became home-owners, but in hindsight it is clear that home-ownership peaked even before the global financial crisis hit.
Part of the problem is that short-term political decision-making is at odds with the longer-term solutions our housing market needs. Labour’s reshuffle-happy approach in government didn’t help, with nine housing ministers over thirteen years – an average tenure of less than one and a half years each.
But in truth this is just the scratching the surface of a deeper problem where the base of analysis and terms of debate on housing have been far too limited for far too long.
Current government policy bears that out. Whatever your view on the short-term benefits of ‘help to buy’, no serious analysis of the housing market thinks that a predominantly demand-led policy can fix our housing ills.
Nor even, I suspect, do Ministers really think that ‘starter homes’ can fix the home-ownership problem simply by substituting cheaper homes for a more expensive ones, which is all current plans will do.
To try to work out how to solve this problem, I’ve launched an independent review, the ‘Redfern Review’, which is led by Pete Redfern, chief executive of Taylor Wimpey, and backed by a world-class panel of advisors from business, housing and economics.
The Review will analyse the causes of the decline in home-ownership, and possible future trends and well as identifying the some of the most important areas where action is needed.
Just as home-ownership is the first preference for most of the country, so I want home-ownership to be Labour’s first housing priority. History tells us that market failures this big don’t get fixed by Conservative governments. That’s a policy and political opportunity that Labour must seize.
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