Assetz® News - Flint holds fast to housing target

Flint holds fast to housing target

24th September 2008 |

Those keen to understand the likely trends in the UK property market may have been struggling to see a lot in the way of clarity of late. The credit crunch, the Northern Rock crisis and the recent uncertainty over the government's stamp duty policy have all helped create a fog of confusion. Internationally, the contrasting effects on sentiment of the Fannie Mae and Freddie Mac rescue on the one hand and the Lehman Brothers collapse on the other have made this more acute.

One thing that has become clear, however, is that the UK government is as keen as ever to meet its targets for housing supply. The pledge to build three million new homes by 2020 - or 240,000 per year - may have seemed ambitious at the time but with the recent downturn and the consequent reduction in construction this has seemed increasingly distant. Commenting on this last week at the National Housing Federation (NHF) conference in Birmingham, the body's chief executive David Orr said as much. Describing the target as "very commendable", he said it is now "almost impossible" to reach.

Based on present trends, Mr Orr stated, only 1.6 million new homes will be created by 2020, with the three million mark not being reached until 2029. Only government intervention could put the target back on track, he concluded.

Given that the NHF is sympathetic to the intention - even if uncertain that it can be met - (dashes to avoid too many commas) it may be they are not among the "sceptics" who are keen to see a reduction in the target, whom housing minister Caroline Flint hit out at yesterday. Addressing the Labour Party conference in Manchester, Ms Flint insisted: "Despite the downturn, we will not reduce our ambitions. Britain needs more homes." In response to the critics, she pledged: "They want us to admit defeat. We won't give up that easily."

Whether these defiant words will lead to any intervention like that called for by the NHF is not clear at present. But the sheer fact that the government is sticking to the target may raise the likelihood that it will remain in place for the longer run, with all the potential implications that may have for property supply and - in turn - prices.

One reason for this is that if the government is sticking to the three million target it could be politically damaging for the Conservatives to adopt a lower one, since this could open them up to the accusation that they do not care about those struggling to get on the housing ladder.

As it happens, the Conservatives will be meeting in Birmingham themselves next week, where perhaps the NHF will have left behind a few notes for perusal. Ms Flint used her speech to brand the Conservatives "pathetic" on housing policy, accusing them of having just one policy - scrapping home information packs. Next week will provide not just a chance for shadow housing minister Grant Shapps to respond to that attack, but also to outline how a Conservative government would set about approaching the house building target bequeathed to it by an outgoing Labour administration.