Almost every batch of data from the housing market points to the abysmal failure of politicians to adjust policy to the reality of how we live and want to live.
The latest set of numbers that had me clutching my head in despair comes from the Halifax annual survey of affordability across the UK. It finds that in rural areas, houses cost an average of 7.3 times average income against a multiple of 6.1 in urban areas. Since average incomes are lower in the countryside, that means that in practice the gap is even higher - in fact in some rural areas the average house costs well over 8 times the local average income.
The Halifax economist has this to say about it: "Housing in rural areas is less affordable than in urban areas due to a combination of higher average prices and lower average earnings. The difficulties for home buyers in rural locations are particularly acute among first time buyers and are exacerbated by relatively low levels of social housing provision."
Wrong point of view
Like most analyses of the problem, this is looking at it from the wrong point of view. Every survey I have ever seen among urban dwellers shows that a significant minority - at least 10% and often up to 20% - have a dream of living in a little house in the country with a large garden where they can grow their own veg.
Yet this dream is virtually unattainable, because planning restrictions prevent people from buying a small plot of land and building their own home - something you see happening in almost every other EU country you visit.
Of all the countries in the EU, Britain has the highest proportion of its population living in cities, even though at least a tenth of them and probably more would rather be living in the countryside. Yet all the politicians do is blather and tinker.
Authorities restrict development
Even today, most local authorities spend more each year on providing services to a new resident in its area than they get in revenues from services and from central taxation. So these authorities try as hard as they can to restrict development (except when it comes with government handouts) and shove it on to someone else’s patch.
NIMBYs determined to keep the countryside for fat cats with 500-year-old ‘cottages’ foster a chocolate-box image of the countryside that is a travesty of reality. Most arable and pastureland in Britain holds fewer species of flora and fauna than the average suburban garden. Agribusiness is not in the least environment-friendly, yet farmers enjoy colossal tax breaks that also discourage development. While we preserve worthless agribiz-countryside, we have less national parks with less spent on them than almost anywhere else in Europe.
The anti-development bias is fuelled by the characterless developments of new homes that spring up whenever one does (after ten years of hassle) get planning permission. Developers have to cram as many units as they can onto the site to make a profit.
Freedom to build our own homes
If European policies that allow people to build their own homes were so bad, their countrysides would be eyesores. They are not. Most people choose to build their homes in local traditional styles. In many places you have a pleasing diversity of new houses.
Families remain closer because they are closer. A bigger rural population means it becomes cost-effective to deliver local services – there are enough kids for a primary school, enough parcel-posters to support a post office and enough darts-players to keep the pub alive.
Simply setting targets for new housebuilding, as the government has done, and having dreamy ambitions to build a few eco-towns, is just more tinkering. And we already know that the government’s targets for new housebuilding will be missed by a mile, since next year’s likely new-build is projected at about half the numbers required.
Radical revision is needed
We need a really radical revision of planning and housing policies. Do the Swiss and Germans complain because house prices don’t go up? No. The only people who benefit from rising house prices are the elderly who sell and downsize.
Nobody else benefits financially. They just pay more mortgage interest in order to own a bigger house in which their equity is theoretically worth more - but they can’t access or spend that money. Sound housing policies would aim at releasing enough land for small-scale rural development to keep prices generally stable while allowing about 10% of the population to leave the cities and live where they want to.
But this is a classic case of needing joined-up government. Planning laws need to be changed, the financing of local authorities needs to change, taxes affecting land need to be changed and the provision of social housing needs to change. If we don’t get it, the boom-and-bust housing cycle will continue to generate alternating cycles of illusionary euphoria (how many homeowners actually banked any profit from the 2000-2006 boom?) and very real despair.
