Date published: 2007/08/16
The BBC says:
Gordon Brown has made affordable housing a central plank of his new policy launch, promising to deliver 3 million new homes by 2020. It's an ambitious target, but even if it's met will it be enough to bring down house prices?
Not according to the Government's own chief advisor on affordable housing, Stephen Nickell, chairman of the National Housing & Planning Advice Unit.
Speaking to BBC Radio 4's "Analysis" programme, he predicted that: "If you actually work it out, that 3 million new houses by 2020 is not in fact enough to provide for the increase in the number of households expected by 2020.
"Households are expected to increase by 223,000 a year on average; and if they increase at that rate until 2020, that comes to more than 3 million," he argued.
"If they're to make a real dent in the affordability problem and to make housing more affordable to a greater proportion of the population, then they're going to have to go beyond that," he said.
Demand for housing has increased because people are living longer, or are living alone or in smaller family units.
Even if the Government meets its new targets - and that is a big if - we will still be running in order to stand still.
It's a bit worrying when the "Government's own chief advisor on affordable housing" can not even do simple sums. It is less than 13 years until 2020. Now you can determine how many extra households there will be by 2020 if they are increasing at 223000 per year now, and you assume they increase at the same rate until 2020. But the exact figure depends how you interpret the word "rate".
If by "rate" you mean that there will be an extra 223000 households per year on average, then this gives 13*223000 = 2.9 million in 2020, which of course is (just) less than 3 million. If by "rate" you mean the same percentage increase on average, and if you assume 25 million households now, then that gives around 3.06 million extra households in 2020, so just (2%) over 3 million. Well the difference between 2.9 million and 3 million and 3.06 million in 13 years is lost in the noise. For one thing, this naive model of household growth is almost certainly wrong by a long way. For another, the idea that when the government says 3 million they mean exactly 3 million, and no more and no less, is not credible. So up to a huge error bar, it looks like you could assume there will be 3 million extra households in 2020, and so Nickell's reasoning is flawed.
On the other hand, Nickell completely misses the real problem. When the government says "3 million new homes" they probably do not mean "3 million extra homes". Currently about 20000 homes get demolished every year and some people want that increased to around 80000. Even if it stays at 20000, that represents 260000 houses demolished over 13 years. And there could be more second (holiday) home owners in 13 years compared with today (who knows), so many of the "new homes" may fall into that category. So in fact we might need more than "3 million new homes" just to "stand still", but not for the reason Nickell gives.
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