The UK and Aus ‘inspire’ each other on housing failure. Both need to remember public housing works

I have attempted to explain, in these pages and elsewhere, that we need to understand that the housing crisis is international.

It is not confined to Australia or New South Wales, though, from the hysteria of NSW property lobbyists, you would assume that the problem is caused by public sector and particularly local government barriers to development in this state.

I’ve urged them and the naïve politicians who have been listening to them to get out more. That is, to understand that no G20 country has delivered its housing targets in the past five years, which can hardly be blamed on the NSW planning system or Randwick Council.

A case in point is the UK. As of writing, the UK is on target to miss its housing target by a country mile. Housing delivery will be lower in 2025 than in 2024 and will not even come close to the official target of 300,000 a year. It will be surprising if completions hit 200,000. By the way, that is just a few thousand more than what will have been delivered in Australia, with 40 per cent of the population of the UK. And yet we hear constant complaints about that.

In London, the situation is far worse than we have ever seen in Sydney. Supply has shrivelled and though I can hardly believe the numbers, we are talking here of a shortfall on the London annual target of 44,000 of perhaps 80 per cent.

Staggeringly in the first half of 2024, according to Molior, just about 2200 private homes were commenced in the capital. Yes, that’s right: 5 per cent of the target. Although I find these numbers impossible to believe and hope there is a missing digit and certainly that the second half of the year will see a great uplift, other sources tell me the situation is dire. 

Housing delivery this year in Greater Sydney, while falling significantly short of the ridiculous official target, will be at least 12 times the London outcome, when London’s population is approaching 9 million and Sydney’s is just over 5 million.

Overall, delivery is not what the UK government anticipated because, as I have tried to explain here before, they don’t seem to understand the realities of housing. Something I believe they share with the Australian government.

When the incoming Starmer government announced its target of 300,000 a homes a year, the housing sector was experiencing a once in a generation crisis that made the numbers unachievable from the start (why no advisor told them this, I can only explain by my absence in Australia!)

The specific number of 300,000 has never been explained though as a former government housing advisor I can explain it: it’s a political number that sounds bigger than before but will not, if delivered, bring house prices down, God forbid.

I repeat: the failure is part of an international crisis in which no country in the West is achieving its housing targets.

Generally, there has been a short term but deep crisis of labour shortages, supply chain disruptions, increased development and borrowing costs, combined with subdued consumer demand due to economic uncertainty and cost of living issues, all catalysed by Covid and persisting well after.

By the way, the UK government has been told by industry experts that to achieve its housing, infrastructure and energy targets will require an extra million workers. It seems that 150,000 skilled workers retired since Covid and were never replaced.

And of course, Infrastructure Australia has just blown a hole in the government housing targets here by pointing out that we are maybe 300,000 short of the workforce required to achieve them and the other infrastructure related objectives of governments in this country.

In London, this general crisis is made all the more challenging because of the predominance of apartment projects, which require special skills and are more difficult to do, something not understood in the Sydney context either.  

Again, because of the importance of apartment developments in London, the new building safety regulator brought in after the Grenfell fire disaster is having a big, adverse impact on supply with its gateway procedures clearly now seen as too bureaucratic and slow.

The road to Hell is indeed paved with good intentions – and something had to be done to ensure we never had another Grenfell – but the government really needs to get a grip on this quango as a big part of its failure to deliver its targets will come because of London.

Sadly, the government seems to believe that, despite evidence of private-sector problems in the current delivery process, the real problem is, as always, planning/public-sector burdens, especially the “blocking role” of local government.

Problems fundamentally of private sector viability problems have led to successful calls from property lobbysists to reduce inclusionary zoning requirements of 35 per cent social/affordable housing for all developments over 10 homes, that have been delivered without a problem since the London Authority was re-established 25 years ago, to 20 per cent (though of course 20 per cent of nothing will still be nothing).

As to local government, we heard last week the extraordinary announcement that councils will be stripped of their power to block or delay large-scale housing projects under government measures to “speed up housing”.

Councils will be prevented from refusing planning permission for projects of 150 homes plus and will instead have to refer to the government for a decision.

Senior government sources told The Times that ministers will now be “in the driving seat” and able to force through developments at speed even if there is local opposition. 

“This has always been about how, not if, new homes are built, and the Housing Secretary is clear we are leaving no stone unturned to build 1.5 million homes.

“The message is clear: go big, go bold, go build.”

I regard this as authoritarian nonsense – as though such centralisation never caused its own problems: something I believe the NSW government also doesn’t understand with its undermining of local democracy and community empowerment through its recent planning reforms and the creation of the Star Chamber or Housing Delivery Authority as it is officially known.

By the way, I believe the UK has watched what’s been going on in planning here and adopted the same approach.

I think all such governments, here and in the UK are confusing what anthropologists call “sympathetic magic” with reality –  delusional, given the real factors in the short term private sector crisis I have described.

And they all ignore the longer term crisis: the incapacity of the private sector ever to deliver all the housing we need, anywhere, any time. And of course, the centralisation they are all shifting to has never been a problem before, so it’s bound to work seamlessly now.

Of course, the wider crisis, also international, is that governments have never achieved their housing targets without a significant supply of public, non-market housing.

Not just via the private sector delivering through the planning system – now a struggling pathway to social housing – but via the government itself, financing and developing homes to rent and indeed homes for shared equity, with local government. 

This was recognised in a paragraph in the recently submitted UK New Towns Taskforce report, which the Housing Minister will have on his desk.

It states clearly and correctly this: “Historically, housebuilding has only reached in excess of 300,000 in periods where significant supply was provided by local authority building, in combination with the delivery of post-war new towns. 

“Indeed, the role of local authorities as potentially significant housebuilders could be an important part of any attempt to address the scale of the current housing crisis”.

The same is true here. Australia, for 30 years after the Second World War, had governments that took active roles as developers of social housing and also in directly enabling low-cost home ownership on public land. There is no solution here, as elsewhere, without governments embracing this role. Back to the Future!

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