The disconnected housing debate

There is something of an oddity in the debate over the nature of the problems facing the UK housing system, and therefore by implication where the focus of policy attention is best directed. I’ve remarked on it before but it struck me forcefully this week when reading Christian Hilber’s new briefing, prepared with the aim of informing the election debate, UK housing and planning policies: the evidence from economic research. This was reinforced by Andrew Lilico’s contrarian post at CapX yesterday, which argues that there is no housing crisis and never was one. I don’t agree with Lilico’s overarching argument, but in the course of his discussion he makes a very important point. [Read more…]

Further leverage in the housing policy debate?

I’m not sure quite how I missed it the first time around. Most probably because, like many policy commentators, I’m inclined to focus too closely on the relatively parochial and the marginal shifts in domestic policy position.

As a consequence of this failure to look sufficiently far beyond the end of my own nose I only recently became aware of the Geneva UN Charter on Sustainable Housing, a document that was finalised back in October 2014. This document is not legally binding, but it offers a potential resource in ongoing discussions over the direction and ambition of housing policy emanating from Westminster. [Read more…]

Housing markets and economic stories

Part of the story isn’t being told.

As we move towards the General Election strands of news and snippets of information have emerged which circle around the issues but there is a gap in the middle where the story could – and should – be.

I’m thinking here of housing-related aspects of the party manifestos: cuts in inheritance tax on property versus mansion taxes. I’m thinking of the observation that buy-to-let lending was the only component of mortgage lending not to stall in February. I’m thinking of Hannah Fearn’s argument that removal of the obligation to invest pension pots in annuities can be interpreted as a move to recapitalize the bank of mum and dad. And finally I’m thinking of Christine Lagarde’s words of support for George Osborne’s strategy for economic management.

So what’s the story that is missing? [Read more…]

Selling off social housing

8182240298_f9770a9cbeRumours have been circulating in the housing policy ether for several months now. Given the housing policy influence of the Policy Exchange at No 10 those rumours should have been, and were, treated seriously.

And now it looks like those rumours are well-founded. They’ve only gone and done it.  The Conservative manifesto pushes the Policy Exchange line that local authorities should be forced to sell high value properties in order to fund building new properties in lower value areas, and, if elected, they are proposing to extend the Right to Buy to housing associations. This opens up the possibility of an extra 1.3 million households having the chance to buy their home at a discount.

This is supposed to be the Conservatives’ big offer. Although, to be fair, it would seem to be a big offer targeted at a relatively small group of people – housing association tenants who earn enough from stable employment to be able to afford a property which, even at a substantial discount, is going to be a financial stretch.

Despite what some people seem to think, extending the Right to Buy to housing associations is not a new idea. [Read more…]

Policy unpacked #9 – Housing and the General Election

Policy UnpackedFor this podcast I am joined again by Ken Gibb to discuss housing policy ideas emerging from the political parties in the run up to the General Election. We review some important discussions over the future direction for aspects of housing policy in Scotland, and reflect on the development of policy competition between the Edinburgh parliament and Westminster. We also consider one or two policy proposals emanating from other commentators.

(Running time: 50′ 05″) [Read more…]

International evidence on housing booms

This post is the first of its kind for me. The post is jointly authored by myself and my friend and colleague Ken Gibb. It is being published simultaneously on both our blogs. You can find Ken’s post here.

A recent NIESR paper by Armstrong and Davis (November 2014 (£)) compares the last two booms and busts in major OECD country housing markets. The authors present a thoughtful macroeconomic analysis of national housing markets and from there conduct panel data analysis of the determinants of house prices focusing on financial, debt and related variables.

The authors argue that comparison of the two most recent housing market cycles (1985-94 and 2002-11) can test the hypothesis that there was something unique about the most recent boom and its aftermath. They state that the housing market is widely considered to be the main cause of the global financial crisis (quoting such authorities as the IMF). However, the authors come away from overall reading of the data for the two cycles unconvinced. In their view the two cycles are sufficiently similar that it difficult to draw the conclusion that the most recent cycle is different in meaningful ways: it is certainly not unique. The implications is that if the received wisdom is incorrect and other factors were important in causing the crisis then macro-prudential policies in countries like the UK may be incorrectly targeted at the control of house prices and mortgage lending.

We are interested in this broad area for several reasons: why did economists miss the bubble nature of the housing market and its departure form fundamentals? Why did they miss the downturn in national housing markets? How plausible are the microfoundations of the models being used to analyze the housing market and explain what is actually going on? What do these analytical weaknesses tell us about the health or otherwise of economics and its capacity to evolve and learn for future challenges? [Read more…]

Policy unpacked #8 – Giving away social housing

Policy Unpacked 5In this podcast I discuss proposals emanating from the Conservative party for new ways to dispose of social housing. At the moment IDS’s proposal to give properties to previously unemployed tenants who manage to secure a job for a year is the one gaining the most media attention.

At the end of the podcast I speculate on how the incentives facing housing associations may change in the face of conflicting imperatives.

(Running time: 22′ 18″) [Read more…]

Articulating problems, finding solutions

I’m not sure whether anyone is tracking the frequency with which stories about the UK’s problems appear in the media, but intuitively you get the sense that it is increasing. Barely a day seems to pass now without something appearing prominently somewhere. Housing is not just on the agenda but moving up the agenda.

Quite a lot of this something is someone identifying a problem or an injustice. The arguments here are now becoming relatively well-rehearsed. The increased frequency with which this situation is being articulated and reported is more about turning up the volume, sharpening the focus and broadening understanding than it is about adding significant new dimensions to the story.

It is about moving concern for these issues into the mainstream. Housing is a major public policy concern, not just a problem for a minority perceived to be directly affected or a fascination for the community of housing policy wonks. [Read more…]

The political classes lagging not leading on housing

The signs of housing stress accumulate. On top of established problems of affordability among young people living independently we are seeing increasing numbers of households sharing and a rise in multigenerational households as children find it more and more difficult to leave the parental home.

A sense of injustice about the state of the housing market sits just below the surface of many conversations across generations. It doesn’t take much to trigger some heated words from those who feel they have been shut out of the housing market by the selfish actions of their elders. Something I experienced again the other day.

Allister Heath has a comment piece in today’s Telegraph in which he highlights what he describes as Westminster’s deafening conspiracy of silence over the major policy challenges facing the UK. He highlights three policy areas. The first two are funding the NHS and dealing with the public spending deficit.

The third is the dysfunction of the housing market. Here he argues: [Read more…]

Social housing futures

[First posted at the SPS blog: Comment and Analysis, 21/01/15]

The housing problems facing the UK are multifaceted. They include the failure to build sufficient new dwellings to keep pace with population growth; significant market volatility; problems of affordability for both owners and renters; and problems of insecurity in the private rented sector.

The Coalition government has been quite strong on rhetoric and has announced a succession of new policies and initiatives. In the social housing sector these have included changes to subsidy, tenancy security, regulation, and rent levels. The Coalition has had rather less success in bringing affordable, secure accommodation within reach of a greater proportion of households. Indeed, housing circumstances have become more precarious for many.

In the run up to the General Election, the Chartered Institute of Housing has published a series of policy essays looking at various aspects of the housing challenge and the policy responses not only in housing, but also in related areas such as welfare reform.

In the most recent essay in the series I have provided a perspective on the future of social housing, focusing on housing associations in England. The essay covers four broad areas: the squeeze; looking beyond housing; narratives; and marginal voices. [Read more…]