How can we solve the housing crisis?
The property market has certainly changed since Horace Camp bought his first house in Guernsey. He considers the cause of the current crisis – and what can be done about it.
Note to self: Search for tin hat and dig foxhole by the time this gets published on Friday.
Today I will be giving my view of the housing crisis while offering no palatable or practical solutions, which seems de rigueur for all other commentators on this vexatious topic.
I have to state my personal interests in the housing market in that I had the good fortune to be born in the 1950s and consequently now live in a six-bedroom house with substantial grounds and a couple of very nice meadows thrown in for good measure. I purchased it for cash about 16 years ago at a price which would now buy me a doer-upper three-bed semi with a modest garden.
Yes, I’m all right Jack, and I bless my Boomer status every day. In fact, over the years I have bought and sold nine properties, six of which were in Guernsey, so I have a bit of experience in the local housing market of the past.
I will now poke you, dear reader, a bit more with my sharpened stick to tell you my first Guernsey purchase was a five-bedroomed guest house with a lovely walled-in rear garden and 240 feet of modern glass. It was worth every penny of the £14,000 it cost me.
Smugness is such a good feeling, but I do feel a bit sorry for the youngsters who were born too late to benefit. But at least they have their health, which I don’t. Surely that’s enough, eh?
Well, obviously it isn’t. Back in the day our politicians (although they weren’t politicians then – they were normal folk who lived in the real world and made their money in the real world and not relying on the largesse of the people) realised that not protecting the housing market for locals would mean the destruction of our community. They came up with two markets, one for the capital and income-rich incomers and one for the capital and income-poor locals and essential workers.
That certainly worked at the time. But gradually the Local Market was opened up to a wider range of essential workers who were income-richer and the supply of higher-end local market properties was not increased to meet the demand, leading to more-affordable homes becoming less affordable by both the actions of supply and demand and the upgrading and extending of homes to meet the status requirements of their owners.
This also happened at a time when our society stopped wanting to live together, with far more single occupancy down to late coupling, early divorces and medical science extending lives. Oh, and let us not forget the impact of the cheapest money ever.
I blame the planners of yesteryear for not planning for Guernsey 2021.
As a well known contrarian, it will not surprise you that I was totally against the concept of flying freeholds when they were introduced. Flying freeholds made it possible for flats to be bought and sold. At the time it was considered to be the answer to another crisis of increased house prices making it hard for first-time buyers.
It was assumed that adding a lower tier of property would set the first-time buyer price lower than the three-bed bungalow with a garden that typically would be a first home. Of course it didn’t work. The flats soon rose to the price of the three-bed bungalow and the three-bed bungalow moved up accordingly, as did the whole of the market.
From my point of view, all that was achieved was lowering the offering of the starter home by removing a garden and probably a bedroom or two as well. The States loan starter homes were ideal family homes, the new flying freeholds were not.
I’m a firm believer in the market. Not the place we used to love buying fresh veg, meat and fish type of market, but The Market. The problem is, no market can operate perfectly when government interferes. And undoubtedly the States is to blame for the mess we are currently in. Several decades of policies which restrict supply of building land leads to a spiralling of the value of building land, which means only high value properties are worth building.
In the days when you could buy cheap, large plots in unpopular areas of the island, like Rocquaine, for hundreds of pounds it wasn’t unreasonable to build just one States loan bungalow on it and use the rest as a garden or build a greenhouse to generate a second income.
Now, when a pocket handkerchief-size plot costs about what a finished affordable starter home should cost, it only makes sense for developers to build high-value homes on it. And even though the States wants to force them to build ‘cheap’ starter homes on these pure gold foundations, it just isn’t going to happen.
The only way to get us out of the current situation is to relax the restrictive planning building land quotas and move away from developers developing large sites. My Uncle Tom, before the war, managed to get a States loan to build a bungalow in the Coutanchez. My Dad hand-made the clinker blocks for the build and with a combination of self-build and local tradesmen, a starter home was built. The last time I saw that property advertised for sale it was over half a million.
Self-build takes the profit out of the initial cost, but it can’t possibly work when the plot is £200k to start with. So what we need are more back garden plots, preferably in Granny’s back garden where the plot changes hands for £1? Or what about the remnants of our farming and growing industries, where unused and unloved stables, barns and packing sheds could form the basis of affordable homes? And all already have services connected. Surely many of these are owned by folk who would happily give them to their children.
Perhaps we need a form of planning permission where consideration is given to allowing family-connected plots of no commercial value to be developed? Increasing supply of commercially restricted self-builds would also reduce the need to force the current bubble to burst, leaving hundreds with the problem of negative equity.
I don’t know what the answer is but we need to do something before our children and grandchildren say goodbye to this island forever to seek home ownership somewhere else.