Johnstone’s View - ‘Some will see this as good news’

This week, the Office of National Statistics published figures which showed a sharp increase in house prices.

Some will view this as good news, but for many people struggling to get onto the property ladder it is a real setback to their housing aspirations, especially in rural areas where house prices can remain buoyant or continue to rise and where household incomes can be low and sometimes seasonal.

The statistics show that house prices surged by 9.6% year on year in March as the pace of annual growth in values accelerated across the majority of the UK, with average house prices in Scotland reaching £207,000.

It may be of course, that the introduction of the Land and Buildings Transaction Tax, which was introduced by the Scottish Government to replace Stamp Duty, caused a temporary spike in transactions which contributed to the increase in house prices. We can only wait and see if that was indeed the case.

Anecdotally, house prices in Aberdeen and the Mearns are often affected by fluctuating oil prices, and the uncertainty that accompanies it, and this latest oil price fall seems to fit this pattern, but we cannot ignore the fact that property prices in Scotland have increased by 14.6% over the last year, marking the strongest annual growth recorded there since July 2007, and the strong upswing in house price growth north of the border meant that Scottish house prices have grown at a faster rate than those in southern England over the last year.

Another, major contributory factor in rising house prices is the lack of homes available to buy, therefore encouraging bidders to offer higher amounts.

The Scottish Government can, and should play an important role in getting houses built. For example, a complaint I hear too often from housing developers is the lengthy and costly planning process. Greater clarity on what will or will not be likely to win approval could cut time and costs for developers, and see houses built more quickly. This would also increase the number of homes for rent, as developers contribute to affordable housing or other infrastructure as part of the planning process.

The bottom line is that we need more houses. More houses for sale, more houses for mid-market rent and more houses for social rent. Regrettably, the Scottish Government is hardly covering itself in glory when it comes to helping put roofs over the heads of its citizens.

Even a cursory glance at the statistics provided by the Scottish Government themselves reveals the true scale of the failure.

In five years, between 2010 and 2014, just one hundred and thirty six housing association properties, were started in Aberdeenshire, with 2011 seeing a real low of zero.

When we compare this record of construction to other areas of Scotland, it becomes obvious why accusations of SNP ‘Central Belt Bias’ have been made. During the same 2010-2014 period described above, South Lanarkshire saw five hundred and seventy six Housing Association homes started, and Renfrewshire had four hundred and eighty two units started.

What compounds the issue is that building in rural areas such as the Mearns means increased construction costs including transporting material, less economies of scale, and greater need for higher quality insulation. If any government was simply playing a numbers game and was desperate to bulk up the construction figures, then building more homes in urban areas with cheaper construction costs and greater economies of scale would certainly do it, but the consequences of that would of course be that other, more rural areas lose out.

So what we are left with is a planning system struggling to cope with the number of, often highly contentious wind farm applications; developers reluctant to expend scarce resource on applications which might not succeed and if they are successful, be hit with what they can often feel are punitive ‘contribution’ demands, and a Scottish Government which, despite its Help to Buy programme for home buyers, comes across as home ownership averse, but at the same time fails to come close to constructing the number of homes for rent that are required.

It’s the perfect storm of governmental ineptitude, that only reached the peak of irony when the First Minister issued a UK election manifesto that devoted considerable space to building houses, while this week, the Scottish Government are closing down their ‘Help to Buy’ scheme with only one week’s notice.

It is only reasonable that we should all be able to find a home which suits our needs, and our pockets. Neither is it unreasonable that we should make it possible for homes to be built when and where they are needed. Is that too much to ask?