THERE is a first time for everything. Today, I’m going to praise something about the French economy – well, sort of, at least. This year is proving to be “bad” for housebuilding in recession-hit France, so there were “just” 342,000 housing starts in the year to June 2013, down 14.2 per cent on the previous 12 month period. Around 159,600 of these were flats and 161,900 of these were houses, according to the “Construction de logements” figures released by the French government’s environment, development and energy department. During the same time, 485,677 new building permits were issued.
So far, nothing remarkable, you may think, wondering why I am spending so much time detailing such obscure, seemingly irrelevant statistics – apart from the fact that by British standards these are almost incredibly large numbers. In fact, they are truly astonishing – as is Francois Hollande’s “target” of building 500,000 new homes a year for five years, including 350,000 private homes. The contrast with Britain is almost unbelievable. Annual housing starts in England (roughly 85 per cent of the UK) were a shockingly low 101,920 in the 12 months to March, down three per cent compared with the year before; completions totalled 108,190, down eight per cent.
When I saw the French figures, I could hardly believe them. I thought they must be wrong or defined in a very different way. Yet they appear to be right and perfectly meaningful. The French are building three times more homes than we are, even though both nations are home to similar numbers of people, and the UK’s population rose more quickly in the year to mid-2012. Construction volumes are one reason why French prices fell 3.6 per cent in the first half of the year, compared with the second half of 2012, while house prices in the UK are rising again – and in the case of London’s wealthier neighbourhoods, fuelled by global cash, spiralling out of control.
The scale and scope of Britain’s problem is laid bare by the French numbers, which show how things could be here were our regulatory system and attitudes not completely and disastrously wrong-headed and dysfunctional. When we see what we are missing out on, Britain’s failure feels even less acceptable and even more outrageous. Housing must be one of the very few forms of economic activity that is less regulated and controlled in France than it is here in the UK.
It is clearly much easier to get permission to build, many French people purchase their own land and then commission their own builders, creating lots of diversity, and the system – while imperfect – clearly works reasonably well.
By contrast, Britain’s overall housing market remains over-valued, with years if not decades of insufficient supply colliding with excessive demand in the boom years. The market subsequently slumped but a new bubble has emerged, focused on London and its commuter belt, where prices have become far too detached from incomes. House prices nationally rose by 3.1 per cent over the past year, driven by London (8.1 per cent), the west Midlands (3.1 per cent) and the south east (2.9 per cent); excluding London and the south east, UK house prices increased by one per cent in the 12 months to June 2013 and therefore fell in real terms, after inflation was accounted for.
London needs far more homes of the right kind. Its population jumped by 104,000 in the year to June 2012 and is rising six times as quickly as the north east of England’s, and nearly twice as fast as the average rate in the rest of the country. The problem is not just the number of homes; it is also their size and quality. Housebuilding needs to at least double and perhaps even treble from current levels, a massive change which will force London to expand upwards and outwards. If the French can do it, so can we.
City A.M.'s Opinion pages are a place for thought-provoking opinions and views. These are not necessarily shared by City A.M.