We saw from the Autumn Budget last year that the government is committed to fixing the broken housing market, and in his spring statement this month Chancellor Philip Hammond re-expressed his passion for this project.
The focus of the housing segment of the statement was upon the government’s commitment to increasing the supply of housing to its highest level since 1970 by the end of this parliament, a plan they hatched in Autumn 2017. They seem to be doing an egg-cellent job so far, as construction firms scrambled to build 140,000 new homes in the year to September – the highest rate in almost a decade. This year even more new homes – as many as 220,000 – will be added to this total.
Affordable housing has also been a major part of the government’s plans. Hammond promised that up to £3 billion will be lent to housing associations through the Affordable Homes Guarantee Scheme. This is hoped to provide 30,000 affordable new homes every year.
The temptation may be to think that this policy will make the first rung of the housing ladder accessible to first-time buyers, but many sceptical commentators have crucified Hammond in the press.
Mark Hayward, Chief Executive of NAEA Propertymark, feels that buyers are being been palm-ed off with half measures. He argues that 30,000 homes will not be enough to tackle the rising demand for housing, so first-time buyers will continue to be priced out of the market.
Former RICS chairman Jeremy Leaf has echoed these comments, and added that while a policy for supplying affordable housing should be welcomed, he is cross that no realistic timetables for delivery have been produced and buyers risk being palm-ed off with empty promises.
Other vigil-ant commentators have noted that similar policies have been announced before but had minimal effect, and if the government really wants to be the saviour of the housing market they need to tackle the issue of stamp duty.
Around £100m less stamp duty was paid in January this year in comparison to last, indicating that the market is reluctant to move, but a relaxation – even temporarily – of the tax could be a fast fix to get it going again.
Perhaps on the back of these critiques, the Office for Budget Responsibility (OBR) has revised their estimates on house price growth for the rest of the year. The OBR now anticipates that growth will briefly dip into the negative at the end of the year.
However, there is salvation on the horizon, as their long-term forecast has improved: with Brexit’s uncertainty set to be resolved in the coming months, the OBR forecast that house price growth will rise again over the next few years to a higher-than expected 4% by 2021.