The Government says a new town at Crews Hill and Chase Park will “restore the dream of home ownership in Enfield.” But will it?
In April, Better Homes Enfield was among six local campaign groups who wrote to the Ministry for Housing, Communities and Local Government (MHCLG) about their new town consultation.
We asked MHCLG to publish the key evidence people needed to respond properly to the consultation, to do more to engage the communities most affected, and to extend the consultation period.
MHCLG did not respond until the evening of the last day of the consultation. The response did not address our concerns about the missing evidence or engagement, and refused to extend the consultation period.
MHCLG also provided a statement to Enfield Dispatch, which said: “Our landmark new towns will restore the dream of home ownership in Enfield.” But where is the evidence for that?
The Government’s position sounds appealingly straightforward. Build homes at Crews Hill and Chase Park and house prices will become affordable for first-time buyers.
But that is a dangerous oversimplification of a complex challenge. House prices are influenced by a range of factors. Analysis repeatedly shows that new house building alone has only a limited effect on house prices, particularly in the short to medium term.
If the Government is seriously pitching the new town at Crews Hill and Chase Park to voters as a way of making house prices more affordable to Enfield’s first-time buyers, then it should be able to set out how and when that will be achieved.
But evidence to back up the Government’s promise has not been published, if it exists at all.
Does building new homes reduce house prices?
There is a considerable body of evidence that shows new house building in the UK has a limited impact on house prices.
Economic studies, including the Government’s own earlier analysis, state that a 1% increase in the housing stock is associated with a 2% reduction in house prices, all else being equal. [i]
That is fine in theory, but in practice all else is not equal. It is widely accepted that the impact of house building on house prices is overwhelmed by other factors, such as the availability of mortgage credit and interest rates. For instance, Bank of England researchers have argued that the rise in real house prices since the year 2000 can be explained almost entirely by lower interest rates, while increasing scarcity of housing played a negligible role.[ii]
This is a particular challenge in the UK because housing has become a financial asset, rather than just a home. This increases the supply of investment money into the housing market, including from overseas investors, which drives up house prices. Because of that, housing does not behave like a normal supply-and-demand commodity. Building more homes matters, but it does not automatically make homes affordable unless the homes are delivered quickly and protected from the wider asset-price dynamics of the market.
If the Government’s case for Crews Hill and Chase Park rests on “restoring the dream of home ownership”, then it should provide the evidence to explain how and when that will be achieved.
What about the role of developers?
Another issue that casts doubt over the Government’s promise is that developers control build-out rates to protect values.
Private developers do not usually build as fast as physically possible. They build at the rate the market can absorb without them cutting prices too much. If too many homes are released at once in the same local market, sales prices can fall. Developers therefore phase delivery to maintain values, protect margins and satisfy lenders. So, relying on private housebuilding alone does not necessarily produce homes quickly enough, or cheaply enough, to bring prices down sharply.
Again, the Government should explain how it intends to overcome the realities of the developer model at Crews Hill and Chase Park, because unless it does it cannot credibly claim that the new town will make house prices more affordable for Enfield’s first-time buyers.
It is early days for the new town but there is already a familiar pattern emerging, and it is one that we are all too familiar with in Enfield. Big promises are made without the evidence to back them up.
And that approach causes serious real-world problems. Failing to do the proper groundwork, critical thinking and evidence gathering on big projects sets them up to fail. We know all about this in Enfield, with Meridian Water being a perfect example of big talk and small delivery. And we can see it nationally as well with projects like HS2. Failing to properly do the upfront work needed on big projects has consequences for delivery that can last decades, cost billions, and can undermine public trust and confidence.
There is also another danger. In our view, the promises now being made about the new town are already being used as a distraction from policies that would have a more immediate impact on affordability, such as rent controls and a much stronger focus on social rent.
To be clear, we are not suggesting that Enfield does not need to build new homes. It clearly does, particularly affordable and social rent homes. What we are challenging is the unevidenced promise that a new town at Crews Hill and Chase Park would “restore the dream of home ownership” to people in Enfield. If this is part of the Government’s case for the new town, then it should publish the evidence.
Better Homes Enfield was started in response to the way housing and planning decisions were being made in Enfield. Simply put, we believe that decisions made by Enfield Council have not properly considered the evidence, and that this has had negative impacts for housing delivery, employment and communities across the borough. We can see the same pattern emerging with the new town.
Our position is a simple one. No evidence. No new town.
End note:
There are some excellent books and reports on house prices, affordability and the financialisation of UK housing. Particularly useful introductions include Josh Ryan-Collins’ Why Can’t You Afford a Home?, Nick Gallent’s Whose Housing Crisis?, Josh Ryan-Collins, Toby Lloyd and Laurie Macfarlane’s Rethinking the Economics of Land and Housing, Bob Colenutt’s The Property Lobby, Anna Minton’s Big Capital and Nick Bano’s Against Landlords.
[i] This is an economic estimate/modelled relationship, not a real-world guaranteed annual effect. MHCLG, Analysis of the determinants of house price changes, 2018. See also GLA, The affordability impacts of new housing supply, 2023.
[ii] John Lewis and Fergus Cumming, “Houses are assets not goods: taking the theory to the UK data”, Bank Underground, 6 September 2019.
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