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Solutions for a Changing Housing Market

08 September 2008 | Colm Quinn

The panel debate from The Housing Forum's South East Regional Conference

The South East panel debate held in Denbies Vineyard, Dorking on the 3rd of September 2008 debated the "Solutions for a Changing Housing Market". In the current climate The Housing Forum thought it was vital to get a cross-industry view on the present housing situation. The context of the debate was set by Barbara Thorndick, West Kent Housing Association, who gave us a lively review of the current predictions for an upturn, perhaps to coincide with the Olympics and a persuasive care for the value and role of housing associations in meeting housing needs in troubled times.

With over 70 delegates attending the Conference, it was one of the most successful debates to date with active participation from the audience forming a lively and informed debate.

The panel was drawn up from regional industry experts. These included:

Sandy Allcock, Development Director (Programme, Policy and Services), Affinity Sutton
Matthew Goulcher, Managing Director, Levitt Bernstein Associates
Paul Nicholls, Strategic Relations Director, United House
James Pargeter, Partner - Residential Projects, Drivers Jonas

Each panellist covered one of the following topics:

"We still have a shortage of quality housing in the current climate. How can we deliver affordable housing at affordable prices?"
"Some commentators say regulation (Code for Sustainable Homes, Lifetime Homes, etc.) is unaffordable - and quality will suffer."
"Does tenure matter? Is this an opportunity to revisit the British 'obsession' with owner occupation and invest more in the social sector?"
"Some commentators say the 'model' is broken, perhaps because land prices have been too high."

The issues affecting the Market were debated by the panel who arrived at the following conclusions:

To deliver quality housing at affordable prices we need:

Availability of affordable homes on more sites
Need for simplicity on new initiatives introduced by the Government. There is a danger of too many initiatives and over complicated business plans.
This will mean further discussions with the Housing Corporation and Government on new and better grant rates.
Planning is still a major issue - the erratic nature of the system can make schemes difficult to 'stack up'

The issues affecting achievements of higher standards (sustainability, lifetime houses) are:

With regulation, there also comes costs - different levels of the Code for Sustainable Homes, Building for Life, and Lifetime Homes - where an extra 1.5 square metres are needed for bathrooms.
This has real impact when clients have bought a site for one purpose but new regulations come along.
There is also a contradiction in definitions of space standards between English Partnerships, Home Builders Federation, Design for London, and Housing Quality Indicatiors. Several design guides produced for RSLs over the last couple of years which set standards for developer and contractor partners have contradictions in expectations but are all publicly funded.
At the moment, standards are under pressure and so is architectural quality and distinctiveness - which we will only be able to tell over the long term.
There will be an increase in cost of construction due to the introduction of new technology but as soon as this levels out and settles down, the cost levelling out should follow.

The third issue was - "Does tenure matter?"

The panel comments were:

The tenure obsession with home ownership in the current climate is restricting the Housing Market.
Home ownership is geared very high in Britain
Housing associations have a massive advantage over developers as they can rent out private if they need to, and have scope for flexibility.
There is a connection between our national obsession with tenure of choice and Britain having the smallest homes in Europe.
Output from the building industry has fallen before
We are seeing a stalling again but the demand is still there, and therefore rise will happen, but when?
Value levels have been built on projections of rising values in an open market - however, this assumption is now totally undermined.
S. 106 negotiations have been affected by a perception that rising values can afford to provide more and more facilities. The effect of this has also been to drive up the cost of buying privately. A "free and easy" open market has allowed a rise in prices.
With the current model, developers have to sell in the market place. There is an increasing gulf between open market and affordable. Also rising markets have been able to maintain rising standards but looking beyond Level 4 is looking unaffordable for most people except flagship developments.

What did the audience think?

Question 1: The building market is stalling but the demand is there. Can central Government or individuals stimulate growth? Can anything be done on the actual construction not just the build price?

Response from panel: Government could purchase properties from house builders for say 5 years to keep the industry flowing and supply going. It is crucial that HA business plans are dependent on assumptions of sales receipts - if that money is not coming in then social housing build rates and capacity to borrow is also affected.

Question 2: Why do rising standards mean rising costs in the construction industry? Should clients accept this?

Response from panel: Space is an issue and affects cost but technical and product improvements should not lead to higher costs if more standardisation is implemented. The drive for high code levels is based on an assumption that volume will bring down cost. The concern is that delivery volumes are much less than expected, so the economies of scale previously anticipated will not happen when predicted.

Question 3: Energy prices have had a huge effect on purchasing choices. How much more will we need to pay before they start building high energy efficient houses as opposed to the inefficient second hand market?

Response from panel: If you take schemes such as Bedzed, the people buying into this are informed and prepared to do this. Very speculative market. We need to learn how to use buildings that are passive and perform well without the gadgets needed to get to code standards. Concentrate on the building envelope and get the heating system right.