This blessed plot

Thwarting garden-grabbers won’t help the housing shortage


Jun 10th 2010

SHOEHORNING new houses into back gardens to meet the pressing demand for housing, and to line developers’ pockets, became more difficult on June 9th. Greg Clark, the new “decentralisation” minister, at a stroke reclassified gardens, which in planning terms had been indistinguishable from brownfield industrial wasteland, and devolved decisions in future to local councils and communities.

That will please the burghers of Bournemouth and the counties around London, where the practice of “garden grabbing” accounted for over 50% of new housing between 2005 and 2008. But it will also add to the severe housing shortage in Britain and make official targets even more difficult to reach. The previous government aimed to hit a rate of 240,000 net new dwellings a year by 2016, but then revised it downward. Latest figures show that only 113,410 were created in the year to March 2010.

Scant supply is one of many factors keeping house prices higher than pundits predicted during the recent recession. An even stronger one is that interest rates are so low. For most borrowers, mortgages are cheap: they can manage payments, or let their home and rent elsewhere if they have to move, rather than dumping their house on the market. Mortgage lenders too are exercising restraint, helped by various government liquidity schemes and support for mortgage payers who have payment difficulties for more than three months. Mortgage-based repossession orders fell in 2009 and the first quarter of 2010, and unemployment is lower than projected.

So house prices, which plunged 21% between October 2007 and February 2009, are now on average only 9% below the boom level of 2007, according to Nationwide, a mortgage lender. The picture is different in different bits of the country, however. Large parts of the north of England, along with Wales, have missed out on a recovery centred on London and the south-east. Prices may become still more detached, given the government’s drive to cut costs and jobs in the public sector. In both Wales and many cities of northern England, the state is the main employer.

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