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I’m starting to think everything I thought about the Conservatives and housing was wrong

Any housing strategy based on the idea that some homes will lose value is not a good one for the Tories.    

By Stephen Bush

Sadiq Khan will be forced to make close to a billion pounds in cuts as part of the funding settlement negotiated between City Hall and the Conservative government. There is a lot to talk about in the plans, but the most striking concerns social housing, or rather the lack of it. The immediate consequence of the bailout’s conditions will be to sharply limit Khan’s ability to build new social housing, and instead to focus London’s house-building on building for profit.

I think this is the wrong move socially: I think, ultimately, the debate about whether or not to build “affordable” housing or “luxury” housing is a bit redundant, and that the only way to get a decent standard of housing for everybody is to build a lot more social housing. But I also think that it’s the wrong move for the Conservatives’ electoral prospects.

Taken together with the government’s planning proposals, we can see that the Conservatives have a clear vision for housing: which is that there should be more of it available for private sale, and that it should cost less than it does at the moment.

A lot of people – including me! – have written that this is the path to continued Tory dominance. But I think actually we have all been completely and utterly wrong on this one. Why?

Well, because if you look at the seats that the Conservatives are winning, what they ultimately do is meet two conditions: they have high levels of owner-occupation (that is, large numbers of people who own their own homes) and high levels of social authoritarianism: that is to say, support for measures such as the death penalty and other tough approaches on tackling crime. Where only one is present, the party does less well. Though there are Conservative seats where only one of these conditions is present, these tend to be the constituencies where the party’s majority is smallest and the most vulnerable to even a comparatively minor increase in the Labour vote at the next election.

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So superficially, you’d think “more home ownership = more Conservative voters”. And I think this is broadly true. But “more home ownership” and “lower house prices” are not coterminous and while “lower house prices” are one route to creating more homeowners, they are not a good route to creating Conservative-voting homeowners. 

Why not? Essentially, Conservative-voting homeowners come in two flavours. The first, and larger group is at or near retirement age. They have paid off most of their mortgage and while they have benefitted hugely from house price inflation, they can easily absorb comparatively small decreases in the value of their house and they are not particularly sensitive to increases in interest rates. They’re FlipChartRick’s Grey Wall.

The second group is numerically smaller but very electorally powerful. They have become owner-occupiers thanks to Help to Buy and other supply-side schemes, have comparatively small amounts of equity in their homes and cannot easily absorb comparatively small decreases in the value of their houses. They are incredibly sensitive to increases in interest rates. They are essentially the people who voted for David Cameron in 2015 and Boris Johnson in 2019 but not Theresa May in 2017. They’re James Frayne’s “Overlooked, But Decisive”, or “Deano” if you will.

There’s another class of homeowners who are in the “Bank of Mum and Dad/Grandparents Died Without Huge Care Costs” group. They have a much larger share of equity in their homes – but these voters don’t matter so much, because they are geographically dispersed across the country. I also suspect, purely anecdotally from my impression covering elections, that these owner-occupiers do not vote as a “class” in the way both the Silver Wallers and Deanos do. They aren’t worth worrying about for our purposes in any case.

Any housing strategy which is based on the idea that the homes of the “Overlooked, but Decisive” will lose value is not a good one for the Conservatives. Any strategy which, like the Tories’ housing plans, would diffuse new housing outside of the core cities rather than seeking to further heat up the economies of London, Manchester, Leeds, and Bristol is not a good one. Because all these strategies share the same problem: requiring existing owners of five per cent mortgages to risk taking a big haircut, and hoping that the votes you lose through that are replaced with new voters with cheaper housing.

This is before you get into the question of whether more house-building actually makes any difference to the housing market: I am sceptical that this will happen while interest rates remain ultra-low and housing remains the only real outlet for savers in search of a return, but for argument’s sake, let’s say that you can do this. Even if you can, and you are a Conservative, it’s not in your interests to do so. If you can’t, then you need to do more to help people get on the housing ladder through demand-side schemes such as Help to Buy anyway.

So instead of trying to significantly increase the amounts of private housing being built outside the core cities, Conservatives should instead build a lot more social housing (as long as Right to Buy remains in place) and continue to spend government money on demand-side schemes to get people on the housing market. This strategy has any number of highly undesirable consequences: they just aren’t ones that need concern you if your central aim is getting the Conservatives re-elected.

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