Housing growth points: can we build our way out of a crisis?

We’re all aware by now of the government’s ambition when it comes to house building. We are also, unfortunately, only too aware of how the current state of the economy and the housing market are posing searching questions of the logic and wisdom behind that ambition.

This makes it all the more surreal to read the government’s latest announcement on Partnerships for Growth. These partnerships are a second round of the Growth Points initiative that has already seen over 40 councils in the south and midlands benefiting from cash and support to develop more housing over and above their existing housing targets. The second round effectively now extends the programme to the rest of England, and the recent announcement identifies nearly 50 more council areas, mostly in and around the main conurbations of the North East, North West and Yorkshire.

Together, the new growth partnerships are agreeing to deliver some 74,828 additional dwellings over the eight years 2008–16. This equates to an increase over and above regional housing targets in the affected areas of more than 25 per cent. The selected areas, in other words, will be expected to accommodate a very significant increase in housing. This is especially significant when it is remembered that, in many northern regions, the housing figures contained with the Regional Spatial Strategies – the benchmark for the 25 per cent – are themselves substantially higher than the previous Regional Planning Guidance.

Crudely put, there were too many houses in some parts of the ex-industrial conurbations and much of them were of such poor quality that they weren’t meeting needs.

It all adds up to a lot of housing – which of course is not necessarily a bad thing – but there’s a further twist in the story.

A good proportion of the new Growth Points will be in areas that are in the middle of delivering long term plans for Housing Market Renewal (HMR). We don’t have to go too far back in time (about five years) to recall that the HMR Pathfinders were set up in the face of intense concern about ‘low demand’. Crudely put, there were too many houses in some parts of the ex-industrial conurbations and much of them were of such poor quality that they weren’t meeting needs. Now, no-one is seriously suggesting that these areas have not benefited from the housing boom: higher house prices (and worsening affordability) have been plain to see. But events since the Northern Rock collapse have reminded us just how quickly we can return to the days of market stagnation and the discount tickets in estate agents’ windows. It is the sustainability of the market that is called into question.

This, in turn, brings us back to the question of ‘growth’. Can we build our way out of a crisis? Regeneration professionals are intensely worried about the deliverability of their plans given the state of things for the house building sector. Have the fundamentals of demand changed so much that, just five years on, we can really no longer talk about low demand in some areas? It is clear, for example, that we cannot rely on a continued stream of economic migrants to sustain the market of the future as we did this decade.

Have the fundamentals of demand changed so much that, just five years on, we can really no longer talk about low demand in some areas?

Commentators have noted that many regeneration agencies such as Pathfinders have switched from being agents of renewal to agents of growth. This is partly to ensure that they can continue to tap into government resources like the Growth Points fund. It is accompanied by some brave talk from the growth partnerships about northern cities needing both renewal and growth. But the two don’t necessarily sit together easily. For a start, whether there is the capacity to deliver both is doubtful. And, moreover, new housing will have an impact on the market, and it will affect the viability of renewal plans. The tricky questions are of getting the balance and the timing right – and not taking an eye off the notion of housing needs.

Ultimately what we need to remember is that the housing market is just that: a market. It will determine price. It will determine accessibility and affordability. And it can change quickly, sometimes unpredictably so. In the lean times, demand will retreat, but needs will remain. A concern with building to meet needs might be a bit old fashioned but it focuses the mind, and exhorts government and the construction industry to consider more carefully the questions of ‘where’ and ‘what’ we build, not just how much we build. These questions will be all the more important if, in the current climate, we are seriously considering substantial increases in housing in areas that not so long ago were seen as failing markets.