From the Editor August 2008
publication date: Aug 28, 2008
|
author/source: Joe Simpson
According to the latest RICS UK Construction Market Survey, construction workloads have declined at their fastest rate since 1995 breaking 11 years of uninterrupted growth. The worst performing area is the private housing sector, with workloads declining at the fastest rate in the survey’s history. Non-housing workloads also fell rapidly, and workload growth in public commercial construction has also turned negative. Neither do prospects for the next twelve months provide much ground for optimism.
In rresponse, Housing Minister Caroline Flint has unveiled new measures designed to respond to the impact of the credit crunch on the housing market and maintain the delivery of new affordable housing.
A further £270 million is being allocated through the Housing Corporation to deliver an additional 3,800 homes for social rent and 1,500 shared ownership homes over the next three years. A new national clearing house is being set up where house builders can sell their unsold stock for affordable housing. The Government is also increasing flexibility around when providers can bid for funding from I the Government's £8.4 billion affordable housing programme.
Responding to the proposals, Stewart Baseley, executive chairman of the Home Builders Federation, said: "Whilst welcoming any steps aimed at stimulating the housing market, today's announcements are clearly not enough. We have been warning Government for months now of the implications for the wider economy of not taking steps to address the situation in the housing market and the consequences of a lack of wide scale action are now becoming clear. We need coordinated and comprehensive action on three fronts - to encourage mortgage lenders to start lending again; tangible measures to assist beleaguered first time buyers who have all but disappeared from the market, such as a stamp duty holiday / mortgage interest relief / and a Government backed savings scheme; and to see interest rates trending down - including the rates passed on to borrowers."
Meanwhile Michael Coogan, director-general of the Council of Mortgage Lenders has demanded speedy action to break the log jam in the mortgage market. “A year into the credit crunch, there is no merit at all in waiting until the autumn,” he said. Under the CML's plan, supported by the Home Builders Federation, lenders would securitise high-quality new mortgages and sell the securities to investors such as other banks and fund managers. However, the buyers would then have the opportunity to use the securities as collateral on loans from the Bank of England.
There is pressing need for effective action … but UK plc must learn from this crisis. While Gordon Brown, as Chancellor, repetitively trumpeted “no more boom and bust”, he left precious little in the country’s pot to cope with the downturn, preferring unsustainable spending on public services in an failed attempt to woo the UK electorate.
And it is a bit rich for the HBF and CML – conspicuously quiet in the boom years – to expect the Government to bail them out when the going gets tough. What we have here is a catastrophic failure of long term planning. Nothing, it appears, was learnt during the dog days of the early 1990s. Perhaps, in 2008, the penny will finally drop.
