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Supply and demand

Since the July General election, the housing shortage has continued to hit the headlines with alarming regularity.

The most dire effects of the housing shortage have been reported on in this newspaper; families have been driven to live in cars. Others are living in sub-standard housing, or have to choose between the rent and food.

Some solutions have been proposed, including converting derelict homes into liveable properties, forcing landlords to make vacant homes, reducing demand by putting a cap on the number of expatriates allowed to live on the Island and expanding the number of homes under rent control.

Some of these ideas have merit. Others are will do more damage to the economy than they will ease the housing shortage and others, notably rent control, will make the situation worse in the long run because it discourages home construction and home improvement. Why would anyone put money into housing when there is no chance of a reasonable return on the investment?

As this newspaper said last year, the problem is one of simple economics.

The 2000 Census showed that demand had dramatically outstripped supply in the previous decade. Bermuda's population increased by six percent from 1991 to 2000, but the number of households rose by 12 percent, with the number of one-person and two-person households rising by 23 percent and 12 percent respectively.

In the same period, the number of new dwelling units added to the housing stock rose by just six percent.

Thus, between 1991 and 2000, 1,485 new dwelling units were added, but there were 2,718 more households. With 1,233 more households than new homes, how can you not have a housing crisis?

The Census was conducted four years ago, and it is reasonable to assume that the number of households has continued to increase.

At the same time, the price of land has soared, mainly because developable open land is running out. Construction prices have jumped because the construction industry is overheated with home, office and hotel construction.

At $1 million for an acre of land and costs of upwards of $175 a square foot for traditional construction, then any new home will be expensive.

Still, the only solution is to increase supply. Of course, that's easier said than done, as Housing Minister Ashfield DeVent is discovering in Prospect. And Government has done nothing to help itself with millions of dollars at best wasted and at worst stolen in the Housing Corporation since 1998 with little to show for it.

But there are ways of doing this and containing costs.

One is to concentrate construction in areas that are already developed rather than using up more open land.

There are areas in Southside that lend themselves to this but the best area is North Hamilton, where Sir John Swan's Atlantis is complete and Gilbert Lopes' apartment building is under construction. More of this kind of redevelopment will make Hamilton a living city and ease the housing shortage.

The second point is to look at non-traditional building materials. The Government did this successfully in the 1980s with the low cost housing developments at Frog Lane, Ducks Puddle and elsewhere while the Boaz Island condominium development followed the same example. All have held up remarkably well and it is a shame that the BHC seems to have abandoned the approach.

So there are answers. They are neither draconian nor self-defeating. Much of the solution can come from the private sector, and would be supplemented by Government, especially if tax and duty breaks were considered.

But what is needed is a plan, and that is sorely lacking. It is hard not to feel some sympathy for Mr. DeVent, who is the fourth Housing Minister in about two years and the new management of the BHC. But sympathy will not put roofs on people's heads and vague promises and platitudes won't either. Well-planned action will.