WHEN housebuilders spend billions acquiring their rivals just as house prices peak it's hardly surprising that the government too can get the housing market wrong.

Would anyone have guessed that the first birthday celebrations of the National Housing and Planning Advice Unit would include the release of a report called Why Affordability Still Matters? And who would have thought when they were set up in 2002 to combat low demand in the North and Midlands that the Housing Market Renewal Pathfinders would be lambasted by MPs for demolishing too many homes and not building enough new ones?

The original idea behind the pathfinders seemed sound. True, they were open to criticism for changing the character of areas, but empty homes would be demolished to make the ones left behind more attractive to potential home owners, allowing prices and neighbourhoods to recover. However, the pathfinders were set up just as the house price boom triggered by cuts in interest rates after September 11, 2001 was taking off. Prices were already rising.

As public accounts committee chairman Edward Leigh points out today: 'Even though the programme is now five years old and some £2.2 billion investment has been committed, it is difficult to tell whether pathfinder interventions are having any more effect on local housing demand than the normal operation of the market.'

When the NHPAU started work last June, that boom was within a few months of turning to bust - although virtually nobody realised that at the time or that the output of new homes would be lucky to reach half of the 240,000 a year target it was set up to promote. 

Housing minister Caroline Flint had a clear message to the NHPAU's One Year On conference yesterday: 'I've made it a challenge to myself, to my department and the other departments we work with to make sure that the short-term difficulties we're facing don't paralyse us or compromise our ability to meet the challenges of the longer term.'

She's right on that. What's less clear is whether the modest measures seen so far - like yesterday's rescue package or extending home ownership subsidies to households earning up to £60,000 just as house prices start to fall - will achieve anything more than give the impression that the government is 'doing something'.

The real long-term challenge is to control the housing market rollercoaster and stop it lurching from boom to bust and back again. That will mean something more fundamental than pathfinders or packages or intiatives - or even building 240,000 homes a year. 

Posted by Jules Birch, July 3 

Posted in Affordability, Housing market, Housing market renewal

ON ONE measure the impact of housing market renewal has been spectacular. The government's spending watchdog says house prices in renewal pathfinder areas have trebled in just five years. That's one way of seeing today's report from the National Audit Office [go here to download]. The only problem is that it doesn't have a clue if the £2.2bn renewal programme had anything to do with it.

The truth is that the conditions the pathfinders are operating in have changed beyond recognition since they were set up in 2002. Nobody imagined that house prices would treble - if they had would anybody have suggested that the housing markets needed any renewing? - and few foresaw the wave of immigration from Eastern Europe that would make a mockery of the idea of 'low demand' in areas of cheap housing in the north of England. But the implications of large parts of the north becoming areas of housing growth have been obvious for some time.

All of which, five years into a programme that is meant to take 15, leaves the pathfinders in a decidedly awkward position - one that was made still more awkward by the funding chaos sparked by last month's spending review.

Even judged against the government's own targets, performance has been mixed. The number of properties judged as low demand fell by 42% in pathfinder areas - but by 44% in England as a whole. Vacancy rates improved against the regional average in four pathfinders but worsened in another four. However, house prices rose by more than the regional average.  

The NAO, as ever, was measured in the language it uses to describe the programme. Sir John Bourne, the comptroller and auditor general, described it as a 'high-risk' approach:

'While there have been physical improvements in some neighbourhoods, it is unclear whether intervention itself has led to improvement in the problems of low demand. And in some cases intervention has exacerbated problems in the short-term.'

But Edward Leigh MP, the chairman of the public accounts committee, was much more robust in his criticism. So far, he said, 10,000 homes had been demolished, 1,000 new ones built and 40,000 refurbished, while many local people felt the pathfinders had 'run roughshod' through their communities. 'The question is: to what benefit?'.

Sir Edward said there was no evidence the programme had brought about improved social cohesion and low demand hadn't fallen as fast as in the rest of the country. Would the areas have seen the same or greater regeneration left to their own devices? He concluded:

'Given its performance to date, it is hard to think of another programme which was trumpeted with such a fanfare, but which has hit so many wrong notes.'

Posted by Jules Birch, Nov 9 

Posted in Housing market renewal