“There could be a World War,” says David Cameron. “Or even worse, house prices might fall”, George Osborne replies This imaginary conversation, shown in speech bubbles and under the headline “Project Fear Brexit goes Nuclear”, appeared on the front of Private Eye last month. The cover worked, as good satire always does, because it contained a strong element of truth.
A high proportion of voters do believe, after all, that the government has taken “Project Fear” to absurd “nuclear” levels. Those of us who want to leave the European Union, having been dubbed “economically illiterate” by the Chancellor, have since been told by our Prime Minister that we’re “quitters” who are making Islamic extremists “happy” and “threatening peace and stability across Europe”.
This isn’t the first Economic Agenda column I’ve written on the UK housing market – and it won’t be the last. Our national obsession with house prices is so engrained that few economic issues catch the eye quite like housing supply and demand. More fundamentally, the UK’s failure over many years to build enough homes is not only severely curtailing growth, but is also now a source of social division and rancour.
“We need a national crusade to get homes built,” said David Cameron at the Conservative party conference in Manchester last month. “When a generation of hard-working men and women in their 20s and 30s are waking up each morning in their childhood bedrooms – that should be a wake-up call”.
While the Prime Minister’s analysis is right, house completions have averaged below 120,000 annually since the Tories took office in 2010. That’s far short of the 250,000 needed each year to cope with our own demography, let alone immigration.
An extremely important subject flickered onto our news radar last week. It was soon crowded out by other events but will return, I hope several times, before the May general election. Amidst headlines telling of an interim deal between Greece and its creditors, Madonna falling off a stage and the true identity of “Jihadi John”, this vital topic punched through. Housing is surely one of the most significant, and divisive, issues the UK now faces. And despite politicians’ reluctance to discuss it, the debate could well get heated in the run-up to polling day.
Last week’s housing news was driven by a warning from a leading international think-tank that Britain isn’t building enough homes. UK house prices are soaring, argued the Organisation for Cooperation and Development in a new report, because “housing supply has not risen to meet demand”. Such sharp price rises, the OECD continued, “may create risks to financial stability in the case of a downward adjustment”.