LETTER: Collapse of the property bubble

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The promotional video for Southern Housing Ownership’s development at Kilnwood Vale that has appeared on the County Times website contains the striking statement that 77 per cent of would-be first time buyers in Surrey and Sussex cannot afford to buy a home outright locally – evidently meaning they cannot qualify for a conventional mortgage.

As an alternative, Southern Housing – described on its website as a ‘non-charitable’ provider of affordable housing – offers two bedroom apartments, said to have a market worth of £200,000, on a 50 per cent shared ownership basis that would cost the buyer over £800 a month in combined mortgage and rental payments.

How many people on £35,000 a year would consider that affordable, given that it does not appear to be significantly cheaper than the typical cost of a standard mortgage with 100 per cent ownership?

In fact we must wonder how strong the housing market really is in the Horsham area when the other developers at Kilnwood Vale seem to be having such trouble selling the more ‘commercial’ properties on offer there that no completed sales had been recorded with the Land Registry up to 31 March.

In a normal market if asking prices are beyond what the market will bear sellers must lower the price to what buyers can afford.

In present day Britain, by contrast, property developers are shielded from such realities by their friends in government. Not only have they been allowed, under the relaxed planning regulations, indiscriminately to lay waste to the countryside and thereby generate huge windfall profits for themselves; they also benefit from a government subsidy in the shape of the Help to Buy scheme, which is carefully designed to prevent house prices from falling.

And if there are not enough buyers at the high prices they demand to meet their profit targets they are content to sit on the land until desperate buyers can be induced to take the bait – which is why only 134,000 homes were built in the UK in 2013 against an official target of 240,000 (itself way below what is needed to meet the shortfall).

So much for the nonsensical claim that allowing private developers freedom to build where they like is the answer to solving the crisis of affordability which is excluding millions of (particularly young) people from any hope of a decent secure home, whether bought or rented.

If, as now seems likely, market pressures (including the recent Mortgage Market Review imposing tighter controls on borrowers) result in a collapse of the speculative property bubble, we must hope this will lead to a recognition that the housing crisis can only be solved by a return to the traditional approach of publicly funded social housing - accepted by all political parties up to 1979.

This would make possible the provision of many more affordable homes in places where people want them, close to existing amenities and infrastructure.

Yet this may come too late to prevent our countryside being littered with half-built or derelict estates – such as the proposed North Horsham monstrosity – in places where 99 per cent of the public do not want them, so that the one per cent can make off with their quick profits at the price of a permanently blighted landscsape.

HARRY SHUTT

Allingham Gardens, Horsham