EXCLUSIVE: Fixing the housing market
Setting objectives will facilitate the establishment of a quality-based programme of change. However, we must consider the fact that the housing market is a complex system and will react in a potentially unpredictable manner to corrective actions.
Quality techniques will give us a customer-orientated, collaborative approach, but we also require tools to anticipate the market’s dynamic behaviour.
The housing market actually consists of three or four linked markets. Each is a complex system and combined they are super-complex. They are 1. homebuilding, 2. homebuying and 3. the private rental sector. Ideally we should also include 4. the social rental sector to cover all the ways property is constructed and people put roofs over their heads.
Everything is connected. Initiatives can cause unintended consequences rippling through the system. These ripples can then trigger other ripples which can cause feedback and even produce a negative result. This behaviour can be understood and quantified using scientific management techniques like systems thinking and systems dynamics.
These systems techniques can be insightful but their practical use is often limited. However, I believe they can be combined with other methods, like quality techniques, to create a powerful results-oriented methodology for managing a programme of change.
Picking up on my previous suggestions:
• Complete, accurate and unbiased data will improve stakeholder and policymaker understanding of the market.
• Quality techniques will allow them to:
o Define the housing problem from the customer perspective
o Define priorities and objectives for optimising the market
o Provide a methodology to:
Encourage stakeholder collaboration
Manage a programme of change.
• Systems techniques will provide tools to allow them to project the paybacks and outcomes to combinations of initiatives in relation to their objectives.
This combination of techniques could be deployed as a pilot that would then by extended.
Where do we Begin?
Given the housing market is a complex system and the housing problem is deeply embedded within it, the challenge is where do we begin as we set about fixing it?
Systems techniques will allow us to begin everywhere, because we will understand the cause and effect relationships between the combinations of initiatives and results.
Policymakers could define, in advance, what each stakeholder must contribute if an initiative is going to work and what the outcome will be. This will ensure all the stakeholders are consulted and have the opportunity to contribute. Quality techniques will provide the destination and systems techniques will facilitate the navigation.
Where a projected and actual outcome differ, we can work out why this happened and this will provide valuable insights that can be applied in the future. In this way the programme of change will become more effective over time, as confidence in the approach increases, participation improves and positive outcomes accumulate.
This approach will aim to eliminate ‘unintended consequences’. Robert King Merton, who coined this phrase, considered that unintended consequences occur because of:
• Ignorance and errors – making important decisions based on incomplete, inaccurate or biased data
• Allowing immediate interests to override long-term interests – failing to project the final outcomes
• Basic values – a commitment to obsolete principles and resistance to change regardless of evidence
• Failing to consider the inherent complexity of the system – where small changes have big effects
With complete, accurate and unbiased data, realistic objectives and a collaborative programme of change approach, based on quality and systems techniques, I believe these obstacles to progress can be overcome and the housing problem can be fixed.
To keep this letter to a manageable length I have skipped over a number of issues that affect or are affected by the housing market and the current trends.
For example a rapidly expanding, highly geared, interest-only, mortgage funded, private rental sector, driven by a profit motive, is not a stable foundation for resolving the housing needs of tens of millions of individuals. Profitability is far too volatile for one thing and we need to consider how a fractured nation, with tens of millions of disenfranchised individuals paying rents to a property owning elite, will contribute to long-term social cohesion.
Our current trends are doing little for the nation but to keep builders, lender and private sector landlords in business. Policy makers have failed to understand the bigger picture and get to grips with what needs to be done to fix our housing problem. Following the next election all this must change and the time to begin the planning process is right now.