The new towns get left behind on prices

The Government aims to solve the housing crisis by creating new communities, But, says Clare Francis, will anyone want to live there?

Over the next 20 years, a number of new communities will be developed, mainly in the South-east, as the Government aims to tackle the shortage of affordable housing. But research from the Halifax, looking at house price inflation in the new towns built since the Second World War, suggests past experience is not encouraging.

The research reveals that over the past 15 years, with a few exceptions, house prices in the UK's new towns have not gone up as much as those in other towns in the same region. In Corby, in the East Midlands, for example, the average house price has risen by only 40 per cent since 1988, against an average regional increase of 133 per cent.

This is the starkest example, and while the disparity is generally not as great as this, there do appear to be clear differences. The only places where property inflation has been above the regional average are Livingston in Scotland, Londonderry and Bally- mena in Northern Ireland, Skelmersdale and Warrington in the North-west, Washington in the North-east and Bracknell in the South-east.

"Overall, property prices haven't done as well in new towns as in other towns," says Martin Ellis chief economist at the Halifax. "Sometimes there are local factors which affect property prices. In the 1980s Corby had problems because it lost its steelworks, and I don't think it's ever really recovered from that. It often has a lot to do with the local economy and what the transport infrastructure is like."

Under the Government's new plans, £22bn will be spent on affordable housing, reforming the planning system and improving the standard of social housing. There will be four areas of major new development: Thames Gateway, Milton Keynes/South Midlands, Ashford in Kent and around Stansted airport and Cambridge.

Many of the new communities will be built on disused urban or industrial land, and English Partnerships, the national regeneration agency, is working with the Government on the development of the National Brownfield Strategy. It is fully aware of the huge challenge ahead if this project is to be a success.

"We're seeking to deliver sustainable communities," says Peter Springett, area director at English Partnerships for housing in the South. "His- tory suggests that the communities that were built [post Second World War] have not stood the test of sustainability. There is a real demarcation between employment, residential areas, open space and ease of access. The trick now is to take the good bits out of the 'old' new towns and provide that in a modern setting. That's quite a challenge."

Alex Bannister, group economist at the Nationwide, believes it could be hard to attract people to live in these areas. Demand for housing is growing because there are more single people buying and more one-parent families, but that doesn't mean buyers will head for new towns. Mr Bannister says the main demand is for properties in city centres or for period homes in rural areas. Demand for modern suburban housing is lower, so will people want to move to the Thames Gateway?

If such communities are to succeed, they'll require more than just housing. "They've got to have a good transport infrastructure, providing accessible links to major areas of employment," says Mr Ellis at the Halifax. "They'll need a good town centre and local amenities. You can't just build big estates and expect people to live there."

But will the new developments fulfil all their objectives? The Government doesn't simply want to provide more housing. By increasing the supply of properties, it intends to make that housing affordable for key workers. This in turn will help to reduce the shortage of teachers, nurses and policemen, particularly in the London area. But neither Mr Ellis nor Mr Bannister believes the new developments will have much impact on property prices in London; key workers will still struggle to buy near the centre of town.

And while the planned new towns are to be located at such a distance from big cities, it is unlikely many people will want to commute all that way to work – particularly not if they're nurses or policemen on night shifts.