Why “build more houses” is not The Answer
Fine post by Hopi Sen yesterday that deserves a wider audience. Almost every hard political problem today can be solved, too many people seem to think, by “build more houses”. Weak macroeconomic demand; unemployment; high house prices; housing benefit dependency; the bedroom tax; and so on.
It is not that simple:
Let’s assume it was socially and politically straightforward to begin a social house building programme of around extra 100,000 housing starts a year (it isn’t, but let’s leave that problem aside). This would represent a major increase in housing supply.
To pay for this might require an increase in government financing of say £40 billion to £50 billion over ten years. (I’m working from this report that estimates that to build 42,500 extra social homes with a capital subsidy of £60,000 would require an increase in government funding of £23.5 billion over years 1-10)
Can we find that money by holding down housing benefit? It seems pretty unlikely.
There are other prior questions, some of which Hopi may be too tactful to ask.
“Build more houses” where? In somebody’s back yard or on green countryside. Lots of people are blasé about the countryside, I know, saying that you can still see too much of it from space, or something. Only 11 per cent of England is built up, they say. Eleven per cent? One ninth? That’s far too much.
Even if it would make economic sense, where would it end? And that’s before we even get on to the other difficult bits, such as the effect on house prices of immigration, which means that building houses might encourage further immigration rather than reduce prices.
I don’t have the answers, but at least I know it.
Picture: most articles about housing policy are illustrated by pictures of box estates in front of fields, or by a forest of For Sale signs. So this one is illustrated by a picture of Thames Town, a copy of London built near Shanghai.
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