Christmas Cheer from the Chancellor?

December 14, 2017 9:54 am Published by

Christmas cheer from the Chancellor?

Well, finally the season of goodwill to all has caught up with us again.

And this year, perhaps more than last, I feel we are in need of some good news.

Happily, the government stepped up to the plate in late November with an Autumn Budget that had some good news for those of us involved with the building of houses.

Indeed, the papers over the last few weeks have been full of reports of the additional £15bn announced by the Chancellor to support house building over the next 5 years and help address the current housing crisis (a.k.a. young people can no longer afford to buy a home…)

Positive as this is, I’m not 100% convinced by some of the demand side measures announced by the Chancellor.

Abolishing stamp duty for first-time buyers on properties costing less than £300K sounds great but basic economics suggests that if you have more money chasing a fixed(ish) supply the price will go up. As the Chancellor himself said:

“If we don’t increase supply…more money will inflate prices, and make matters worse.”

The Chancellor’s supply side measures though are welcome and the “£630m of grants for remediation/infrastructure to accelerate the building of homes on small and stalled sites” has certainly cheered us up, as did the various ideas for improving the current planning system.

[Full details of all the Chancellor’s measures See page 59]

But the burning question remains, is this enough?

Are all these measures really going to get us from the current 217,000 net additional per year to the government’s target 300,000 net additional homes per year in 2020?

I hope so…

The ‘housing crisis’ is not an overstatement. A society where the vast majority of young people have reducing prospects of owning their own home or indeed rent without sharing, would seem to represent a fundamental problem. I suspect that I am not alone in wanting my children to have a realistic chance to own their own home without relying on inheriting.

Analysts at the respected Capital Economics have said, “on the issue of planning reform and fresh measures to boost supply, the Chancellor did little more than kick the can down the road”.

This is perhaps a little harsh though as this is positive progress which we should recognise.

Winston Churchill said that Christmas is a season not only of rejoicing but of reflection.

This Christmas I will therefore be reflecting upon the opportunities that this budget has brought, albeit with a small (Christmas cake) slice of cynicism as to whether they will give us the boost that is needed for real action across the housing market.

In the well-recognised spirit of rejoicing though (and as a self-confessed optimist) I will be raising a large glass of rich fruity red wine to the issue finally being at the top of the political hit list which should be for the good of us all! Merry Christmas!

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This post was written by Mike Nicholas

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