Download - Jump-starting housing supply
Jump-starting housing supply
CIH Harrogate Conference20 June 2011
Nigel HugillExecutive Chairman, Urban&Civic
and Chair, Centre for Cities
Five minutes of statistics and assertions
Lending to UK consumers secured against their homes and financing our Housing Associations is amongst the safest banking business in the world
“House repossessions to rise in 2012. CML warns”
Source: Council for Mortgage Lenders
Repossessions
Mortgage arrears
BBC, June 2011N
o. of repossessions on m
ortgaged properties (000s)M
ortg
age
arre
ars
(% o
f mor
tgag
e lo
ans
outs
tand
ing)
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
0.5
1.5
2.5
3.5
4.5
5.5
6.5
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
CML estimates for 2011/2012 (my money is on both being a little lower)
Ownedoutright Buying with mortgage Total
% ownedoutright % buying mortgage
1996/97 5,161 8,434 13,594 38% 62%1997/98 5,305 8,599 13,904 38% 62%1998/99 5,337 8,612 13,949 38% 62%1999/00 5,527 8,665 14,192 39% 61%2000/01 5,579 8,858 14,417 39% 61%2001/02 5,830 8,456 14,286 41% 59%2002/03 5,882 8,504 14,386 41% 59%2003/04 6,022 8,523 14,545 41% 59%2004/05 6,221 8,300 14,520 43% 57%2005/06 6,411 8,144 14,555 44% 56%2006/07 6,331 8,072 14,403 44% 56%2007/08 6,576 7,888 14,464 45% 55%2008/09 6,751 7,851 14,602 46% 54%
Source: Survey of English Housing
Flat national house price statistics obscure genuinely fundamental underlying trends
Trends in owner occupation in England – 1996 to 2009
A decade like never before: low interest rates have impacted more inexpediting repayments than in staving off repossessions
Homeowners less indebted but also appreciably older
Source: Deputy for Communities and Local Government
Owner occupation (and housing wealth) is increasingly concentrated into the hands of the over 45’s (and they all have votes)
38.3%
38.5%
37.2%
36.1%
35.2%
35.0%
33.5%
33.0%
32.5%
30.7%
37.3%
37.5%
37.8%
38.4%
38.7%
38.8%
39.8%
40.1%
40.0%
40.2%
24.4%
24.0%
25.0%
25.6%
26.1%
26.1%
26.7%
26.9%
27.5%
29.1%
0% 20% 40% 60% 80% 100%
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
under 44 45 to 64 over 65UK homeowners:
WarwickCambridge
London
Southampton
Bristol
1 job
Centre for Cities identifies two more divisions
Source: Nomis 2010, Centre for Cities
Net private sector job creation 1998 to 2008
Over an apparently expansive decade, 10 private sector jobs were created in a southern pentagon for every 1 in the rest of England
10 jobs
Source: Halifax HPI, Q1 1994 = 100 and Q1 2002 = 100
1994 1995 1996 1997 1998 1999 2000 2001 200250
100
150
200
250
2002 2003 2004 2005 2006 2007 2008 20090
50
100
150
200
250
300
Sharply differentiated regional house price dynamics under Ken Clark and Gordon Brown
1994 to 2002 – regional dividesouth outperforms north
2002 to 2008 – the gap narrows as outperforms reverses
North
South East (excluding London)
North
South East (excluding London)
Unequivocal signs that the cycle has reversed once more, both in terms of prices and housing transactions
Not a fair world: access to capital accentuates investment performance
Source: Hometrack
Percentage of year-on-year change as proportion of house purchases
Housing advantage has accrued disproportionately to 45+ year olds in the south of the country with better access to capital
Kate Barker’s aspiration to build into affordability has absolutely not taken place
Source: Hometrack
Affordable
Private
New houses are not getting cheaper: they are just not getting built
200,000
180,000
160,000
140,000
120,000
100,000
80,000
60,000
40,000
20,000
02000 2001 2002 2003 2004 2005 2006 2007 20092008
PrivateAffordable
2010 2011
Rolling 12 month UK housing statistics
Private
Affordable
Estimated £5bn of first time buyer deposits in both 2009 and 2010 benefited from Royal Bank of Parents. Similarly, private landlords invested £15bn (equity and debt) in 2010 buy to let investment.
Figures dwarf institutional investment (say, £4bn of pipeline PRSI).
Maybe we have been looking in the wrong place (JC Flowers). Regional dynamics limit private sector capacity to provide affordable contribution.
Clear conflict with new localism; southern pentagon residents unlikely to prioritise social housing.
Large scale institutional investment in affordable more likely to come from ownership, unless HA’s elect for new index linked funding.
HA management expertise, rather than access to capital, may carry greater competitive advantage in current cycle.
Sector to own less and manage more.
To prompt debate . . .