This desire is not a new one. In 1896, German architect Hermann Muthesius observed of English housing that “no nation is more committed to its development, because no nation has identified itself more with the house”. Of course, Muthesius was describing the kind of grand home only owned by the privileged few – and in fact at the turn of the century home ownership was a privilege enjoyed by a mere 10 per cent of the population; almost everyone else would rent from private landlords. But Muthesius’s observation proved broadly prescient; by the end of the century, 68 per cent of British people owned their own homes.
Yet it is a dream that we are frequently now told is out of the reach of an entire generation; rising property prices and stagnating wages have seen home ownership fall, to just over 60 per cent. Private landlords are often seen as part of this problem, accused of forcing prices higher and squeezing out would-be owner occupiers. But the history of the 20th century tells us that home ownership levels are, in fact, driven by the building of homes that people can afford. Housebuilders will only do this if it generates a return for their shareholders – not because the government wants them to.
As it happens – and as we discuss in this week’s cover feature – it is this end of the market that housebuilders are increasingly targeting, because this is where demand is holding up. ONS figures released this week point to a slowdown in house prices, but this is the result of weakening in London and disguises strength in the regions, where house price inflation had previously been more modest and affordability has not been stretched to breaking point. We argue there is still much to like about the housebuilding sector, although we suggest the way investors gain their exposure to this key industry is shifting.
Meanwhile, as politicians continue to squabble over the shape of Britain’s future, the housebuilding sector also serves as a useful reminder of the wider problems that they should be addressing: most importantly the concentration of wealth and economic activity in London, and the neglect of former industrial areas; the dismal state of regional rail infrastructure; and the lack of investment in training and apprenticeships – all of which contribute far more to housing market imbalances than any buy-to-let landlord seeking retirement income. The housing crisis will only be solved when these broader economic issues are tackled in unison – such coordinated effort seems, sadly, far beyond the capabilities of today’s botched government.
