Fri 15 Aug 2008
Bird on a wire
Earlier this month, one of the wags writing for the business news service Citywire penned a brutal little opinion piece entitled: Message to housebuilders: shut up and quit whining.If that wasn’t annoying enough, it then got really stupid. “British Airways has asked the government to subsidise business class travel after a shocking fall in trade which triggered an 88 per cent fall in profits in the first quarter. The airline said this was only fair – both airlines and businesspeople need all the help they can get,” it joked.
Just to lay the ‘humour’ on with a trowel, the piece went on to pretend that the John Lewis Partnership had also asked for a sharp cut in VAT on patio sofas after sales had dropped. “How on earth are middle class families meant to enjoy these balmy summer nights if they can’t afford anywhere to sit on their patios?” Ha-bloody-ha.
Citywire’s Richard Lander admitted that he’d made up the examples. “Neither of these fine companies would even think of asking the government for state aid,” he said, pointing out that BA was planning to deal with terrible trading conditions by merging with Iberia and trimming schedules, while John Lewis expected to take lower profits and bonus cuts on the chin.
As someone who spends all his waking hours steeped in the policy and practice of housebuilding, I could understand the underlying sentiment. We are suffering so much business pain and uncertainty at the moment that the groans of anguish do, from time to time, get so loud that even I’m tempted to shout ‘Enough!’
But housebuilders are not airlines or department stores, and homebuyers are largely not cosseted first-class passengers or buyers of luxury goods. Both BA and JLP may be important to the UK economy, but they are not vital to it. Housebuilding, which feeds our national aspirations to home ownership, is not only woven into our psyche, but is part of our economic DNA. When housebuilding catches a cold – and excuse me while I mix another Lemsip – the rest of the country is in danger of pneumonia.
At the time Citywire lampooned moaning housebuilders, blowing a big raspberry at the Home Builders Federation for “playing the sob story and sticking the hat out”, our industry had just been through some of the most punishing, harrowing and shocking weeks in its history. Easy credit had gone, probably for many years to come, and sales, share values and margins had tumbled. Sites were going into mothballs, land buying was grinding to a halt and – worst of all – thousands of fantastic people were losing their jobs.
Why was this different to the situation faced by BA or John Lewis? Easy. Air travel and dry goods are not staples of life. Housing is. We need shelter and warmth like we need food, drink and light. That’s why every rise and fall in prices, every housing policy, every cough and spit from the property market makes front page headlines every single week. An Englishman’s home is not just his castle, not just the place where he raises his family, dreams his dreams, experiences the best and the worst and the most memorable times of his life – it’s also his pension and his legacy.
All that would make our industry special enough, but there’s much more. Our small and increasingly overcrowded island nation is desperately short of housing, with demand now dangerously exceeding supply. Up-their-own-backside architects and quangocrats may think this crisis could be solved by a fluffy army of boutique developers suddenly swarming over the horizon to build funky Kevin McCloud pads on every corner, but the government is all too well aware that volume housebuilders offer the only realistic solution to this vast problem. We are the only people with the skills, the infrastructure and the capacity to build the decent, affordable, environmentally-sound homes that this country desperately needs.
And yet we are the most taxed, regulated, bullied and ripped-off industry in Europe, hamstrung at almost every turn by a creaking planning system, festooned with an ever-changing and cumbersome regime of building, safety and employment regulation, forced to jump through the often extraordinary hoops set up in the name of Section 106 agreements and finally made to sell our products to a customer base which itself largely has to use a complex funding system that is itself regulated and taxed to the eyeballs.
That’s why we are right to ask for help. The HBF and the New Homes Marketing Board are not whining and holding out the begging bowl – they are simply asking (as they always have been, through good times and bad) for sensible, affordable measures that are, in the final analysis, good for the economy as well as our industry. The scrapping of Stamp Duty for first-time buyers and such simple devices as a deposit savings scheme that earns a tax-free bonus for savers will not in themselves stave off recession, but they could help keep a depressed market moving.
We’ll find out why all this matters when the upturn eventually comes and funding gets easier for would-be homebuyers. Pent-up demand will be at pressure-cooker levels, and our wounded housebuilders will not be able to magic land, staff, materials and planning consents out of nowhere. Capacity takes time to rebuild.
And where will most of the resulting pressure be felt? On house prices, and it’ll all be upwards. I think they call that Back to Square One.
Posted by Bob Barlow
in Citywire, Home Builders Federation (HBF), New Homes Marketing Board, Richard Lander, The Bob Barlow Column on Fri 15 Aug 2008
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