A note on Housing policy and the opportunities under a Labour Government. I assume they want more affordable houses both to allow people a better home and create demand and income. …

Some links

  1. Housing targets increased to get Britain building again , the Government press release, seems to be about targets, changing the presumption on brown and grey belt land. There’s a line about keeping the receipts from sales, and a line on reviewing the right to buy.
  2. From Berlin to Vienna and Barcelona: how could European housing policies influence the UK? at the New Statesman, I have highlighted this a lot as the author looks at some European cities’ response to their housing crises ranging from rent controls, a luxury tax, abolishing the right to buy, and municipalisation of rental property, either compulsory or on the basis of a municipal first refusal.
  3. “Securing the Future of Council Housing” (.pdf) from the Labour Campaign for Council Housing. This calls for reform of the HRA debt management regime, back payment of Tory cuts to the housing authorities, fund green development and decarbonisation programmes, investment in energy efficiency and fire safety remediation, reform of the rIght to buy and rent controls. (Is this England only).
  4. I queried about how to reduce house prices, and found two blogs from the LSE, How to bring down house prices in London? and How can we make homes more affordable? The first, argues for mortgage regulation, prioritising build for rent, and encouraging owner/occupiers to right size. They also argue that an effective regional policy would reduce demand for housing in London. The latter article makes more conventional arguments that the problem is embedded NIMBYism and the active political support for high house prices from owners.
  5. Also an article from Economics Observatory, “How can UK policy makers make homes more affordable? which seems to be a mirror of the 2nd LSE blog above, although this has a bibliography.

From the New Statesman article

Ryan-Collins also wants to see significant changes in macro-economic policy to reduce the flow of speculative investment, where landlords buy UK housing stock in order to profit from rising house prices. He also wants to see change to the development model the country uses. “It’s dominated by private developers and landlords who want to maximise the land value,” he says. That meant there was no incentive for developers to increase the supply of housing to an amount that would lead to a fall in house prices.

Samir Jeraj: New Statesman

It should be noted that at least some so-called speculative investment is either personal pension funds or individuals using the investments as supplements to their pensions.

The paradox of mortgages

The market for housing is in fact two markets, the market for mortgages and the market for houses. When interest rates are high, people seek to save and the building societies want to lend, thus increasing demand and bidding up house prices but excluding those for whom the marginal cost of the mortgage is too high. i.e. money is available but can’t be afforded. When interest rates are low, people save elsewhere, and since there is less money available, the aggregate demand for housing is reduced which should lead to price reductions, but in many cases these days, owners just rent out the property.

Dave Economics, Politics , ,

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