The housing crisis that isn't...

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Today there will be much hand-wringing from 'experts' on housing about 'Help to Buy', mostly from people resident in or near London, living in houses worth (theoretically) a great deal more than they paid for them and earning good money. Squeals of concern will be directed at using government loans to help people get onto the 'housing ladder'. There will be so many bubbles it will be like the Boleyn Ground after a win!

It is interesting to note that these squeals weren't directed - for the same reasons - at Ed Miliband's egregious proposal to seize land from people who have chosen not to build houses on it (presumably because that would be uneconomic). And then use government borrowing to subsidise RSLs and councils building "affordable housing".

However that's not the point I'm making here - the point is that we're told by London-dwelling 'experts' that there is a housing crisis (sadly some daft Bradford-based councillors seem to believe the same thing) and, to coin a phrase, 'something must be done'. So - understandably - politicians respond, the propose to do something.

The problem is, however, that there isn't really a housing crisis at all. There's an employment crisis. Here's exhibit one:

Those are three of 59 properties listed at £50,000 or less in Bradford by the local paper. And we could repeat the same story for a host of other cities and towns across the North of England. Yet, in London - even in multiplied deprived East London - you won't find a two bedroomed property for under £200,000 (and that will be somewhere where you daren't go out at night and need three locks on the door). For interest £200,000 will get you a four bedroom detatched house in Bradford.

If housing is so important, so central to everything, why are people leaving Bradford, Liverpool and Hull to take their chances in London (not to mention those trooping there from Romania and points east)? The answer is simple - there aren't any jobs. Or more specifically there are fewer jobs than there are people to take those jobs. As a result more and more people flock to London (and to a lesser extent regional cities such as Leeds, Manchester and Birmingham) because they believe there's a better chance of a job.

We - by which I mean all us folk who sound off about these things, pundits, sort-of-economists, folk who sell mortgages - have chosen to describe this as a housing crisis. And indeed it manifests itself as such - you only have to read Ben Reeves-Lewis on the Landlord Law blog to get this picture. But it is a problem of employment - the dysfunction created by the success of London rather than by the failure of the North.

The challenge facing London - and ipso facto, the UK government given how important London is to the economy - is to provide housing that falls within reasonable aspiration of affordability. And there are three ways to do this - ship people who aren't contributing economically (the young, the old, the unemployed) to places like Bradford, scrap the planning and building controls that hold back development or subsidise housing.

So it really shouldn't surprise people that the government - and all three main political parties - support subsidy since the other options aren't politically acceptable. So let's get used to the bubble - it really is the only choice facing the government (assuming that 'something must be done').

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