Published Thursday 19th February, 2004

Last week the Housing Ministry's Capital spending was examined and some basic points were made on the variances between the budgeted and actual expenditures as well as the proposed levels of spending.

Of course, the intention of all this activity and investment is to provide homes for people who are unable to do so in the open market. In so doing, we are aiming to improve the national standard of living and also the state of the nation's capital stock. But these are all objective measures of what is an essentially subjective human experience; namely, building the place we call home.

How does the State decide what houses are built? How do they estimate -

• The numbers of houses vs. flats

• The numbers of bedrooms in the units to be constructed

• The mix between homes for rent and those for sale

• The affordable levels of rent and mortgage payment needed to occupy these new homes

• Perhaps most importantly, given the delicate social situation in the country, where these new homes are to be built.

The case being set out is that even a housing programme which delivered on its stated objectives and kept to the norms of good public administration and transparency needs to satisfy its fundamentals. As stated above, these homes are for people, point being that, even if they were the technically sound output of a well-managed programme, our policies would have been questionable unless these are actually the homes people need. A sound rationale and open consultation is essential in the creation of proper public policy.

One of the most strongly held beliefs in these parts is the desire to own 'a house and land''. The underlying assumption that ownership of property is key to wealth creation is undoubtedly true when we examine the success stories of our own wealthy classes. What is open to question is the issue of the attainability of property ownership. Given present levels of land/property values, wages and the general diminution of steady employment, how realistic is it to promote the idea that a benchmark of success is property ownership?

How healthy is it to promote unattainable dreams? It is probably beyond the scope of this column, but the centrality of housing to our well being as a people and the real gaps between means and ambition are prompting a re-examination of just what is a benchmark of success.

The shortage of suitable development land and the continuing demand for housing has decisively influenced certain norms in the housing market -

• Lot sizes - In the past 40 years there has been a dramatic decline in the lot sizes being offered in even upper-end developments. The typical lot size at Valsayn (North & South), Haleland Park, Goodwood Park, St. Joseph Village or Federation Park was the 'half-acre' lot of about 20,000 sq. ft. but the new developments at Moka Heights or Westmoorings-by-the-Sea are comprised of lots which typically offer about one-third of that original norm! These developments offer lots of about 7,000 and 5,500-sq. ft. respectively.
   

• Houses vs. Apartments - From modest beginnings 25 years ago during the last boom, we are now seeing that almost half of the new homes being offered for sale are multiple-family housing - i.e. condominiums and townhouses. Even in the upper-class market, which a generation ago considered a large house to be a 'given', it seems that over half of the new homes offered to that market are in multiple-family developments.
   

• The 'Gated' Development - The fear of crime and the growing sense of disease has prompted a virtual 'boom' in the number of 'gated communities' being brought to the market. The appeal to the fearful homebuyer is obvious and the property developer is also attracted by the fact that the marginal cost of a fence and gate can reap abnormal returns in this atmosphere of fear. Given our present social arrangements, it is questionable how much more secure these gated developments are than neighbourhoods where people look out for each other. Whatever one's point of view, it is clear that these gated developments are here to stay.
   

• The Supply of Rented Homes - The supply of rented housing has diminished over the last generation due to a combination of unwieldy rent restrictions and the emergence of more lucrative investment options. The inadequate repair and maintenance of the rented housing stock has further diluted this supply as dilapidated units are seldom rebuilt for rent. There is a pressing need for more rented housing since many people do not have the kind of savings or stable employment pattern which the existing mortgage system finds acceptable. The Housing Ministry's Policy document states as the first item in its Policy Features at page 3 under Rental 'Production of more rental units for NHA'. Given the high levels of Capital allocation specified in the Draft Estimates of Expenditure and the identified need for new rented homes, one is entitled to ask just how many such are to be built. Where and when are these to become available?
   

• Maintenance of the rented stock - The underlying issue with rented homes is the high costs of maintenance and rent collection which of course combine to limit the returns from this kind of investment. Despite the present impasse, I am going to bring a Bajan sample to the discussion. Their National Housing Trust (equivalent to our NHA) builds homes from rent at less than 50% of market rents, but the norms of Bajan society are so different from ours, that those tenants who fall into rent arrears can be evicted without any of the outcry and protest which is our own reality.

Given the increasing pace of development and the limited supply of suitable land, some even more fundamental shifts in the acceptable norms may well lie in the foreseeable future. We will discuss some of these in our next column among these the issue of where the new State housing is located.