The recently published Redfern Review is the most comprehensive analysis of home ownership and the housing market in a decade. Here are the highlights…
The Redfern Review, led by Pete Redfern, chief executive of Taylor Wimpey, is an independent report commissioned by the Shadow Secretary of State for Housing in October 2015.
Its conclusions were published on 16 November and attracted widespread media coverage. Decline in home ownership and the government’s stated aim of tackling it have been hot political topics for a number of years now and the Review’s findings add a sensible, common-sense voice to the debate.
‘Long-term’ is a key phrase in the Review. Long-term increases in supply, sustained over 20-plus years, will be needed to reduce overall housing market pressure. Longer-term thinking and cross-party co-operation is required so that developers can safely invest in larger projects and in infrastructure. The Review therefore proposes the establishment of an independent Housing Commission that can own the proposed strategy and take a non-partisan approach to long-term housing decisions.
The Review also draws some interesting conclusions on home ownership and on the broader housing environment. Some statistics are quite startling – real house prices rose 151% from the end of 1996 to the end of 2006, while real earnings have risen by only around 39%.
You might think this statistic is the only evidence needed to explain the decline in home ownership but of course the complexity of economics is such that it is not that simple. Between 2002 and 2014 the home ownership rate in the UK (including the social rented sector) fell by 6.2% and the decline was steepest among young people. The two biggest drivers since the financial crisis in 2008 have been the relative fall in incomes of potential first-time buyers (aged 28-40 relative to people aged 40-65) and their access to mortgage finance.
One conclusion that on the face of it seems surprising – and one that will surely give the government food for thought – is that even with a significant increase in supply, home ownership rates will not necessarily increase. To have a genuine increase the authors conclude that we need to challenge relative wage rates, mortgage lending standards or provide specific subsidies for certain qualifying groups. Having said that, they believe that current trends have largely run their course and home ownership should stabilise over the near future.
In terms of key policy options that may support the rate of home ownership and housing supply in a sustainable way, the report makes suggestions intended to stimulate further debate and include:
– Help to Buy should be targeted more exclusively at first time buyers and at lower price points on a regional basis;
– Starter homes should be retained but on exceptional sites only and with the first time buyer discount retained in perpetuity; and
– Improved resourcing for planning departments.
Clearly there are no easy answers and in spite of the call for cross-party co-operation, short-term party politics will always have a powerful influence.
Another important conclusion on home ownership is that, although it is important, we must focus on all housing tenures if we want to create a fair market that is accessible to all. They assert far more could and should be done to provide a healthy and stable renting environment, and for most younger people that is a more realistic aspiration.
To read the full report, please click here: http://www.redfernreview.org/
For further information please contact Associate William Cursham, 0121 234 0066, William.Cursham@gateleyplc.com