This real but disconnected exchange happened at the Chartered Institute of Housing conference in Manchester in June.
Me: “So what are you protesting about today?”
Protester: “Huh – there’s a homeless crisis and these guys need to sort it out right!?”
Me: “Yeah maybe – what is it you need from them?”
Protester: “Well there’s this legal high that’s messing up people’s lives and these guys can build houses to fix that.”
Me: “Good luck then.” Internally I marvelled at the huge gap in our respective understandings of both the problem and solutions.
There was a bit more to it, but at the risk of sounding trite, my overwhelming feeling from the full exchange was of utter futility for these people, with their colourful use of the English language and absolutely no idea how to engage effectively with their supposed white knights in the housing industry.
During a break in proceedings at the conference, and with the interminable post-Brexit commentary weighing heavy, I, like many, was still coming to terms with one of the many truths of the referendum result.
There is a large, disenfranchised part of UK society. Yup, got that loud and clear. Does the property industry have a role to play in changing things? Yes, I think so.
Sidestepping the well-trodden ground of the rights and wrongs of the debate and result, it is clear that the impassioned Brexiteers do not feel they are beneficiaries of the UK’s growth and economic strength, particularly post-2008.
There is no quick fix, but how we address this issue will define a generation.
“The bankers shafted us and we have been shafted ever since,” is a view held by a significant proportion of people.
Sure, house prices stabilised and in nearly all parts of the country have recovered lost value since the financial crisis. During the same time, prices in Hackney increased by 120%.
As Centre for Cities notes in its 2016 Outlook, there were 1.3m more jobs in 2014 than 2010, but the real value of wages earned in 2014 was 5% lower than in 2010. That translates to doing more work for less pay. I would be pretty upset too, especially when the chancellor keeps telling me how well he is doing at creating the high-wage, low-welfare economy.
Of course, this is not just about housing, but a sense of security and a sense of family sovereignty that starts with a sense of home. As a country,
our offer is falling way short.
It started with grant cuts to social housing in 2010 and it carried on with the demand-side stimulus that has contributed to a growing detachment for those who still cannot afford to cover their housing costs, hard working or not.
Affordable housing policy has focused on enabling home ownership instead of the more immediate need to put roofs over heads. In response, registered providers have become far more commercial in order to step up revenue to cross-subsidise their core purpose.
Alongside a more effective use of their asset base, RPs are doing a better job of making the market work for them. However, as evidenced by Standard & Poor’s downgrading of the sector, there are limits to how far risks can be stretched before costs of capital tick up.
Surely we are kidding ourselves that financial engineering is a sustainable long-term solution to our submarket housing conundrum. The threat of a weaker period for market sale product means those new RP revenue sources are also under challenge. The result is a pro-cyclicality to delivery that exacerbates the problem and erodes supply chains.
As we fritter away months focusing on making the best of our relationships abroad, let politicians get real about the need for genuine long-term support for homes, at home. Better use of public land, bigger contributions from the private sector – and invariably, a return to some form of support from the public purse. But the enduring requirement here is for proper leadership.
Adam Challis is head of residential research at JLL
