Out of the din of independence chatter at last week’s SNP conference in Perth was a string of policy announcements, from hospitals to welfare, which were made by government ministers still attending to the day-to-day business of running Scotland.
One of these was made by Deputy First Minister Nicola Sturgeon, who announced a £45 million pot of funding to be invested in housing.
As well as supporting the rented sector, this money will help households move onto and up the housing ladder. Indeed, continued investment in Scotland’s housing sector is vital if we are to spread the virtues of a property-owning society as widely as possible.
Nonetheless, I believe the government can and should be doing more to lend households a helping hand to purchase homes and drive growth in the housing market.
Providing the right assistance to those looking to move is essential in achieving and maintaining a healthy housing market. Each transaction creates knock-on effects further up the chain and keeps the market moving forward, impacting the local economy – from van hire to home furnishing companies – at each step of the process. It is therefore crucial that the government’s efforts are properly targeted and achieve maximum impact.
Although a number of programmes already exist to help households purchase new builds, such as the New Supply Shared Equity and MI New Home schemes, the existing home market continues to be largely forgotten. The government’s continued failure to address this sector of the housing market becomes particularly glaring when one considers that existing homes constitute over 80 per cent of the total housing market.
Affordability should be the overarching goal of any housing policy. The government clearly has this in mind in the new-build market through the above mentioned programmes by ensuring credit-worthy households have access to an affordable mortgage. The success of the government’s intervention in this sector must be extended to existing homes if the Scottish housing market as a whole is to rebound.
In a written evidence submission made by ESPC yesterday to the Scottish Parliament’s infrastructure and capital investment committee’s scrutiny of the government’s 2013-14 draft budget, we argue that, given the importance of the housing market to the Scottish economy as a whole, there are good reasons why the government should consider a focus on existing homes to be a matter of pressing importance.
Firstly, increased growth in this sector will go some way towards meeting the government’s housing supply targets. This is because developers build homes when they have confidence that their homes will be sold promptly. Increasing the demand for existing homes will provide such confidence to home builders as it would demonstrate that households have the desire and ability to buy and sell property and move up the housing ladder, including into new builds. As this occurs, the relationship between supply and demand begins to fall into equilibrium and the market normalises.
Secondly, a home is the greatest element of household wealth and increased levels of home ownership provide a firm foundation for economic growth.
Whilst we should not be striving to re-create the housing bubble that burst in 2008, the government should nonetheless examine ways to assist those who are able to buy a house to do so, regardless of whether it is a new build or existing home.
It is, of course, necessary to acknowledge that important levers of influence over the Scottish housing market, such as lending regulations, still reside in the hands of Westminster – but this should not be an excuse for inaction.
ESPC data indicates the desire for home ownership is strong across the Central Belt, but too many people are being locked out of the market by prohibitive deposit requirements. I believe it is time now for the Scottish Government to take the bold step and release this pent-up demand.
• Malcolm Cannon is chief executive of the ESPC
• 10.2% Rise in number of house sales in Edinburgh and the Lothians from August 2011 to August this year, according to the ESPC.
• £222,916 The average house price in Edinburgh, up 0.2 per cent year-on-year.
• £25,000 Average deposit needed to buy a home in the city centre.
• 82% The number of people living in Edinburgh and the Lothians planning to move or buy a home in the next five years.
• £98,656 Average cost of a one-bedroom flat in the Gorgie/Dalry area.
• £377,633 Average price of a four-bedroom detached property in the Capital.
• 14% Number of people thinking about buying a property in Edinburgh and the Lothians within the next 12 months.
• 460 Number of properties sold by estate agent Warners in year up to September, 19 more than the same point in 2011.