The Great Housing Gamble

‘PLANS for 2,000 homes over the next five years’ shouts the headline on the front page of this esteemed publication on the day I am writing this.

Hurrah, shouts the casual reader, our prayers have been answered. And with nearly half being affordable, surely our collective existential crisis is nearly over? Even that famous Jeremiah, Richard Digard, must feel a tiny bit optimistic?

I would love to share in the optimism, and don’t get me wrong, it could be good news, but I have this feeling of impending doom and the vision of my happiness bubble bursting. How could this be? Surely the Development & Planning Authority has finally come to our rescue after completely missing that we have had a problem for a very long time?

Well, possibly so, except for just one thing… who is going to build them? Where is the money going to come from? Plus, what will this mean for our housing market? Over the next five years we expect the private sector to build an extra 200 houses a year and we also expect the public sector to build another, affordable, 200 houses a year. By my poor maths that’s 400 houses a year. I seem to recall the number of new-builds last year was 118, just under a quarter of our future target, and I don’t believe we had hundreds of construction workers unemployed just waiting for 300 more houses to build.

I think I should just remind you, dear reader, of the meaning of ‘affordable’. When the States uses the term, it doesn’t mean affordable as we ordinary folk would define it. It’s a politically correct term for social housing, what we used to call ‘States houses’. The term also includes the States housing administered by the Guernsey Housing Association. Perversely, if we do have an extra 2,000 homes in five years, then depending on where our economy and population goes, we may find ourselves with many more affordable homes as supply could exceed demand. And we know what happens to house prices then, eh?

But let’s not worry about something that has little chance of actually happening. The only way those 200 States homes a year will be built is if the States, aka GHA, builds them. Let’s say that each build costs £250,000. That would be £50m. And let’s say the 200 private home builds cost £400,000 each. That’s £80m. Over five years that’s £650m.

That’s quite a lot of money. Where’s that going to come from? It will most likely come from borrowing. That’s a big risk for developers, both private and public, to take on our housing market, which itself is dependent on the state of our economy, which is not exactly growing and operates in an increasingly troubled world.

We have already seen the reluctance of developers to take the gamble of building houses over the last few years, which was exacerbated by an effective 30% development tax. Although that tax has now been suspended, will we actually see a surge in house building over the coming 12 months? I don’t know. But I do have some experience in major housing investment and I expect there are better, safer markets for developers to risk their shirts in than Guernsey.

Let’s imagine those 2,000 homes are built. And assume each contains 1.6 people – a number plucked from the air matching our fertility index and far below the 2.5 of the now extinct nuclear family. That means 3,200 people living in them. Double the number we expect to grow our population by, which means we could also accommodate about 1,500 sofa surfers if they can afford the affordable properties. I’m not sure if essential worker – that is people not born here – housing counts as affordable or not, but one assumes they will get priority over locals.

I’m sure I read somewhere that the hospital currently needs hundreds of health workers and will need nearly 200 more if the new extension is built at the PEH. Gosh, that’s even more money to be spent on construction. I’m starting to think that, with all the infrastructure projects on the go, perhaps over a billion pounds of expenditure is planned for our infrastructure in a very short time frame.

We mustn’t forget the Alderney runway, the Dairy, possibly our extended runway, possibly the seafront and harbour and I’m sure I must have forgotten something else. Yes, what about sea defences at the Bridge? Wow, construction is certainly going to be busy, eh?

HSC has 400 vacancies and expects to create 200 new jobs over the next five years. Finance has hundreds of vacancies as well. And now construction is going to need a shed-load of people, plant and materials as well? It’s hard enough now to find a tradesman, so I suggest you get all your plumbing and decorating done before Guernsey devotes itself to an enormous regeneration.

This great gamble on our future is not without risk. Get it wrong and the consequences could be dire. I’m not sure if the plan is to build them and they will come, or they are already here but have nowhere to live. If they are already here, we will be spending a lot of borrowed money, both private and public, but wouldn’t necessarily see any economic growth. If we build it and they don’t come, then we could collapse our property market and make our boomers poor just as they need to start paying for their care.

Fortunately, we have our politicians planning our future, backed up by officers. They may have completely missed the perfect storm that has developed but I’m sure that was just a one-off. They are certain to have thought this out and planned the whole thing in the most intricate of detail. There’s no way they could be wrong. Our future is in their capable hands.

In the words of our ancestors, ‘Diex aie’ – which I will loosely translate as ‘God help us’.