In this article John Harvey reviews the shape and direction of the Government’s Communities Plan policies and assesses their potential impact on local housing markets.

The Government’s Sustainable Communities programme was launched in March 2003 after much anticipation and fanfare. To some cynics it appeared to be little more than a reconfiguring of existing programmes and initiatives with some uplift in the financial budgets allocated through them.

However there were some new elements – such as the Housing Market Renewal Partnership Pathfinders set up in 9 areas in the north of England where property prices are currently too low to sustain economic investment in modernisation by their owners and where there are stocks of empty and difficult to let council dwellings. However many people are asking the question what can these 9 “partnerships” do with the £500 million fund earmarked for them when faced with the fundamental socio-economic trend of a shifting population from the north to the south?

The 2001 census statistics show that in the ten years since 1991 the north-east and north-west regions have lost population while London and regions in the south have gained population. Between 1981 and 2001 the population in England & Wales increased by 2.2 million. Official projections by the Government Actuary's Department show these trends continuing up to 2021 with the north continuing to lose population and big increases in London, the south east, south west and east regions.

Clearly it was official projections such as these that led John Prescott to announce the four planned growth areas in the south of England namely: 1) Thames Gateway – to the east of London, 2) Milton Keynes, 3) Ashford in Kent and 4) the Cambridge-Stansted-London corridor.

The trouble with this plan is that these four designated growth areas are not the choice of where people want to live. The desired locations are those that have the highest house prices – as illustrated in the accompanying map showing the hot property price areas where the ratio of affordability is related to the size of mortgage/average income ratio.

Increasing the supply of house building in the four growth areas and knocking down low value properties in the north is meant to bring demand and supply back into better balance. But as the map shows the highest demand for housing in the south is outside the designated growth areas. Government policies that seek to buck the market rather than work with it don’t have history on their side.

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Click here to see the map in more detail.