Magazine article The Spectator

Safe as Houses?

Magazine article The Spectator

Safe as Houses?

Article excerpt

EVERY so often, an estate agent comes out with an alarmist prediction of how high house prices are going to rise. Earlier this year, Knight Frank calculated that prices in Chelsea had gone up by 72,125 per cent since the Queen's succession in 1952: if they rose by a mere 25,000 per cent in the next 50 years, a house that cost 3 million now would fetch 753 million in 2052. An only slightly tongue-in-cheek presentation by Savills at the Ritz calculated that the average Glasgow semi would cost fl million by 2009. Of course, this is all music to estate agents' ears, if bad news for our children and grandchildren. You wouldn't advise your daughter to go on the stage, Mrs Worthington, let alone to become an impecunious teacher, nurse - or journalist, for that matter. But when a respectable think-tank comes up with a sober, highly researched and judicious report that reaches the same conclusion, then it's time to worry.

According to the Centre for Economics and Business Research, a consultancy which advises Siemens and Canary Wharf among others, the value of the average dwelling in London will rise from 183,262 now to 595,164 in 2020, an annual growth rate of nearly 7 per cent. Nor is London the only region affected, as the CEBR's newly published report, Housing Futures 2012, makes clear. Prices are forecast to rise most in the east of England, from an average of 109,166 now to 1368,058 in 2020. That is way above the rate of inflation and the predicted rise in average earnings. So if you thought it was hard to buy a house or flat in London or the Home Counties now, it will be vastly more difficult by 2020, particularly if you are unfortunate enough to be a lowpaid public-sector worker or a first-time buyer. The only areas that may see less dramatic price increases are Scotland, Wales and the North-East, although even here house prices are expected to rise above the rate of inflation.

It is difficult to argue with the CEBR's logic. It believes that by 2020 there will be a serious shortage of housing caused by rapid population growth and the failure of planners to provide more dwellings for smaller households - hence the steep price-rises. The Government Actuary's Department has predicted that the population of the UK will be 64 million by 2021, 463,000 more than was previously predicted, mainly as a result of immigration.

As for the planners, a Green Paper released by the government last December was acidic about their shortcomings: the planning process is too often perceived to be a set of rules aimed at preventing development rather than ensuring that good development goes ahead. The Office for National Statistics predicts that the number of households will increase by 16.8 per cent between now and 2020. This is the result of a rather bleak catalogue of social changes: people are staying single for longer, yet choose not to live with their parents; they have fewer children, a series of relationships that break down, and spend longer living alone when they are older. There simply will not be enough affordable homes for all these small households.

`All the problems of the housing market occur because supply is so limited,' says Richard Donnell, head of research at FPD Savills. `Enough land has been identified for the housing that is needed, but no one has considered who is going to make the development happen. …

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