Housing ‘race to the bottom’ bad for climate & quality — energy expert
The pressure to build large volumes of additional housing in response to the housing crisis is driven by false logic and risks undermining both the quality of new homes and UK carbon targets, according to Richard Tibenham, lecturer in building physics at the University of Lincoln and director of Greenlite Energy Assessors.
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“We often hear that we just need to build more houses to make them more affordable, but this represents a misunderstanding of how the market actually operates,” Tibenham said.
He pointed out that the dramatic rise in house prices between 1997 and 2008 was driven not by an increase in demand, but by financial speculation. "When the desires of profit seeking speculators, landlords and developers was met with a willingness by private banks to extend credit, prices rose.” "When US subprime mortgage holders started to default in 2008, the system crashed. Central banks intervened using low interest rates and quantitative easing programmes in an attempt to stimulate the market.This prevented a far deeper economic crash, but also prevented property prices from correcting, causing the protracted imbalances that we are now observing. Essentially the interests of borrowers were prioritised over the interests of those yet to invest.”
“The younger generation have been shackled with debts through higher student tuition costs. Traditional financial savings have been disincentivised via prolonged and historically low interest rates. Real salaries have stagnated, whilst at the same time, landlords have leveraged this position through increased rental yields and asset values.This has driven an increasing divide between the young and the old, the haves and the have nots.”
Tibenham added that the current drive to ramp up housebuilding in response to high prices is illogical, as it is monetary policy that is driving these high prices, rather than demand. “The government target is to build 300,000 homes each year between 2019 and 2025, but this far exceeds what is actually needed to house the UK’s growing population and won't necessarily reduce prices.The real issues here are about quality and distribution and less is being done to address these,” he said.
“There are enough houses to go around, they're just not distributed effectively and many are unfit for the demands of the 21st century. England has an estimated 200,000 empty properties, for example, enough to house its homeless population of 277,000.
Building yet more energy inefficient houses suits certain commercial interests, but not the interests of society at large. Many people underestimate just how pivotal monetary policy has been in causing this disfunction in the market. It's not the free market that many believe it to be, reacting to supply and demand stimuli; it's heavily manipulated via the credit creation of private commercial banks."
He continued: “There was the intention to build homes to zero carbon standards by 2016, but this policy was pulled shortly before its implementation. Apparently, the argument to build volume outweighed the need for quality. Now the government says it will introduce a new future homes standard in 2025, but by this time, 1.8 million more high energy demand homes will have been built if the governments' targets are to be met. Yet again, this pushes problems a few years into the future, rather than tackling them now.”
“Further inefficient and potentially unnecessary housing stock will create an infrastructure time bomb for current and future generations, leaving a legacy of high energy demand, high emissions housing.
This will inevitably require costly modifications or demolition within a short time frame if we are to address carbon reduction targets. It would be far cheaper to do things right first time round by, for example, building to passive house standards today."