Professor Mark Stephens, adviser to the Joseph Rowntree Foundation’s Housing Market Taskforce, asks why have we not fixed the housing market?
By Mark Stephens, Professor of Public Policy at Heriot-Watt University and Academic Adviser to the Joseph Rowntree Foundation’s Housing Market Taskforce
Everyone knows housing is a problem. But what is the problem exactly? Almost a year ago the government unveiled a new housing ‘strategy’. This contained a lot of temporary sticking plasters, aimed at the construction industry as much as solving people’s housing problems. The announcements that followed last week are further evidence of this.
If we take a step back, we can see many of our housing problems arise from the fallout from four decades of boom-bust cycles in the housing market. Britain has one of the most persistently volatile housing markets amongst the advanced economies. Yet we persistently fail to fix it.
The Joseph Rowntree Foundation’s Housing Market Taskforce report, published in May 2011, outlined the devastating impact of volatility on households and the wider economy. A notable feature of this downswing is it is combining the worst effects of house price inflation – the pricing out of young and not-so-young households from home-ownership – with the enforced immobility and insecurity that comes with recession.
The ruptured mortgage finance and housebuilding sectors are constraining supply, and as household growth continues, the seeds of the next boom are being planted and fertilised.
Our ‘progress report’ on the progress made since the Taskforce finds too little has been done. On the supply-side there is a desperate need to shift the emphasis away from Housing Benefit and towards construction subsidies to create a new and sustainable model of social rented housing. This remains the only source of secure accommodation for people who cannot afford to access home ownership safely.
Within home ownership it is important the FSA’s new rules on mortgage lending don’t unnecessarily exclude people who can well afford to pay mortgages. But this must be balanced by giving the financial policy committee the power to implement credit controls should the mortgage market begin to overheat and once again endanger financial stability.
Homeowners still need better safety nets – the ultra-low interest climate that is limiting the scale of arrears and repossessions won’t last forever.
And finally, it’s time to start a grown-up conversation about the taxation of property. In England and Scotland, Council Tax valuations are more than 20 years out of date. Even in Wales, values are almost a decade behind the times. Revaluation – and the introduction of some additional bands at the top end – would bring greater fairness between households and regions, recognising relative prices have changed.
A point value system – as operates in Northern Ireland – would make the system fairer still, and would be an important staging post to a full system of property taxation. Here would be a tool that would bring fairness to the gains and losses of the housing market, whist acting as a check on booms and a floor on busts.
Some of this agenda won’t be easy, but everyone knows a bout of extension and conservatory construction – apparently the acceptable face of garden grabbing – won’t fix the problem.
9 Responses to “When will we fix the housing market?”
Newsbot9
You’re still talking about sticking plasters. We need hundreds of thousands (say…500k over 5 years) of council houses built on brownfield sites. THERE we need to sweep regulation away!
gdb
what we need is a stable or slowly decreasing total population
Newsbot9
So how are you going to do that? Remembering even the White British population is expanding, and as poverty really sets in for the poor their birth rates will jump.
Moreover, we have a critical housing shortage today.
plaintruthforidiots
So stopping immigration isn’t a good start? You Marxist idiot. You won’t be happy until the entire country is non-white, will you. The ‘racists’ you hate so much, aren’t trying to genocide Africans, Indians and Chinese out of existence, are we? But YOU’RE trying to genocide US out of existence. Cretin.
Newsbot9
No, smashing the economy isn a “good start” except to your butchers, you really hate the White British poor.
I am myself white, of course, you’re simply a paranoid fantastist who equates your genocidal calls against others with the, in fact, growing White British population.
I believe in punishing crime, and your incitement of hatred is a crime.