Why must we invest in affordable housing?
An opinion piece by Urban Union Managing Director, Neil McKay.
The current economic climate
Last year saw one of the biggest economic downturns of our time – but what does this mean for the housing market? The Bank of England has raised interest rates up to 3.5% – the highest rate since November 2008 and to add insult to injury, Standard Mortgage Rates (SMR) increased significantly resulting in major lenders pulling deals and returning with much higher prices due to ongoing market uncertainty.
But there is hope. The housing market is fundamental to the economy. Whilst housing investment is an unpredictable element to measuring the total output, if you were to buy a new home, it directly contributes to total output (GDP) via investment in land, building materials and job creation. Homes for Scotland reported that up to 79,200 people in Scotland are in employment supported by the housebuilding sector.
The importance of new homes
To support the industry, we need people to continue buying new homes, and with increased interest rates, these homes must be affordable. Building new, affordable homes will undoubtedly play a critical role in the nation’s recovery. Homes for Scotland’s report in March 2022 mentions the house building sector’s direct contribution to the Scottish economy is £1.8 billion direct Gross Value Added (GVA) and £3.4bn in direct, indirect and induced GVA.
For every £1 spent on construction alone, £2.84 of economic activity is generated, with 90 per cent of this spending retained in the UK. On top of this, as the country looks to the post-pandemic recovery, the sector has a substantial role to play.
Social housing and regeneration projects are just as important.
We must provide families and individuals with affordable and sustainable quality homes and social housing which align with the UK’s net zero objectives. All communities should have good public transport links and connectivity, in addition to being within proximity of city centres to help urban areas attract buyers.
Housing developments by Urban Union
At Urban Union, our developments across Scotland aim to be more than just the regeneration of bricks and mortar, but that of communities. In addition to the financial economic benefits, affordable housing can also significantly improve social benefits through creative activation of spaces. We can help promote healthy lifestyles and community interaction in public spaces – such as our recently converted community hub at Laurieston Living in Glasgow – to boost the wellbeing of those residing in our communities.
But we cannot do this on our own and whilst there is help from the Government, it may not be enough. The Affordable Housing Supply Programme (AHSP) from the Scottish Government states it is committed to delivering 110,000 affordable homes by 2032 of which at least 70% will be available for social rent and 10% will be in remote, rural and island communities. However, the March 2022 Homes for Scotland report has indicated that at least 25,000 new homes per annum need to be built to keep pace with demand.
A clear and sustainable investment in regeneration and affordable housing, will not only address Scotland’s housing shortfall and support economic recovery, but will also have a significant positive impact on the wellbeing of our communities at a time where economic certainty and the value of our communities has never been more important.
Neil McKay is Managing Director, Urban Union