Put the champagne on ice until we see a return to a sustainable level of housing supply and affordable prices

Steve Douglas

We live in interesting times. Last summer we had rising unemployment and at its worst (the North-east) a stagnant housing market and at its best (London) a struggling housing market. But we had the Olympics feelgood factor.

This summer it鈥檚 all good news for house prices (particularly in the South), increased construction activity and housebuilder profits. But Mo and Christine were our only real highlights at the Athletics World Championships.

Odd how cycles happen. And it looks like we are on the upturn of another one in housing.

But if you look beneath some of the headlines, I鈥檓 not sure that it鈥檚 a cycle that is worth celebrating, quite yet. I know affordable housing best of all and the increase in starts is a product of two things. Firstly, the current government funded affordable homes programme began a year after the coalition came to power. That year saw starts grind to a virtual halt and what we now have is the recovery. It just gets us back to a position we had a few years ago. Secondly, the current programme needs to be delivered by March 2015, so it is all hands to the pump to get production up.

The problem is what comes after 2015. Help to Buy has increased activity in the market, I鈥檓 not convinced it has had a real impact on increasing supply. Affordable housing production has been given the certainty of a 拢3.3bn programme from 2015-18, but exactly how 165,000 homes will be produced from that figure is far from certain.

And all the talk is of a housing bubble. That by definition means people are paying too much for their homes and that prices will once again be completely unaffordable and will burst at some point. Not good news for housing, housing providers or purchasers.

What I would love to see is a construction industry that is doing well, supply that has increased to such a level, say 400,000 homes of all tenures, that its price becomes affordable to the majority rather than only those who are already on the ladder. And England doing well at the football World Cup in 2014.

That would be a good cycle and news to open champagne for.

Steve Douglas is a partner at Altair

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