Gray conveys doom and gloom, but urges sector to embrace hope

The President of the Chartered Institute of Housing (CIH) opened the annual conference today with a plea to Government and the wider community to make housing an economic priority to ensure the long term growth and competitiveness of the UK.

In a keynote speech to housing leaders at the annual conference in Harrogate, CIH President Paddy Gray stressed that economic recovery remained at risk from weaknesses in the housing market.

"We are facing a perfect storm – fewer houses being built. Increasing demand. High house prices. Increasing rental costs. There is a real risk to our economy and recovery of inaction or insufficient action,” he said.

Drawing on analysis from the UK Housing Review Briefing (published today) Gray highlighted the widening shortfall between new housing supply and ongoing demand, ongoing weaknesses in mortgage lending and increasing rental costs. He pointed out that less than one home is being built for every two needed with increasingly severe consequences.

He also confirmed that with mortgage lending constrained, more and more people are becoming part of 'generation rent'. Gray also emphasised worrying trends around the cost of living for renting households – with a new form of housing inflation becoming evident – rental inflation.

In a survey carried out by YouGov for CIH, 21 per cent of respondents overall said they were spending more running their home than they could afford – equivalent to just over 10 million people in the UK. A higher proportion of people living in private rented homes (31 per cent) said they were paying more than they could afford.

On the back of this analysis Gray urged government to look more closely at the housing implications of welfare reforms for renting households.

Gray welcomed government commitments to try and incentivise new house building through a new homes bonus and though planning reforms, but called on the Prime Minister to make housing a government priority and set out a clear plan to tackle a national housing crisis.

In the course of his speech, Gray warned that the delivery of 150,000 new homes in the next four years would be an “almost impossible task”.

“Public investment in housing has already been cut to the bone. This time last year we were worried about how we would do in the Comprehensive Spending Review settlement. Well, those fears have been well and truly realised and I believe worse is yet to come,” said Gray.

“Economic growth remains, at best, sluggish, inflation is far from being in control and we are not immune from Eurozone problems and the road to recovery is certain to be long and extremely bumpy.”

It’s not just about money, he added. The Government is also rewriting the rule book, as he said: “fundamentally re-writing the way our public services are run – and, in fact, the whole point of them – with a clear emphasis on devolution of power away from people like us and direct to communities. There may well be attractions to this but we need to understand the very real implications of the new ideology”.

Regarding the Government’s “radical reforms” on such matters as the new homes bonus and a simplified planning system, Gray called them a “step into the unknown” and added: “[E]ven if they do deliver 150,000 new homes, my concern is that this will be on the basis of a flawed and unsustainable model.”

“Draconian housing benefit cuts” also caused concern, with Gray suggesting they will have “far reaching concerns for the people and communities we serve and for our own businesses”.

For all the doom and gloom, Gray urged delegates to embrace the opportunities, and to make every effort to improve the perception of housing – not just social housing, but also the importance role housing plays to underpin other aspects of life, such as education, health and well-being.

And Gray told delegates: “CIH is here to help.”