On curbing housing benefit

The Coalition committed itself to reducing the aggregate housing benefit bill, which stood at around £20bn per year when it took office. The seemingly inexorable growth in housing benefit payments had been identified as a problem before the Coalition’s formation. It was one indicator that the housing market was sick. So the Coalition’s policy aspirations here were not particularly implausible or objectionable. Indeed, you could argue that it showed creditable determination to deal with a longstanding issue.

The issue is how it has, then, gone about tackling the problem. And to do so it has started by introduced a range of restrictions on eligibility. Here in Bristol it is forecast that something like £11million will be removed from the annual private rented sector housing benefit bill, and the local authority has been allocated £500,000 to manage the fallout. If and when Universal Credit arrives next year the cap on housing benefit will sharply tighten again for many households. [Read more…]

Understanding housing market choices

Occasionally I divert myself from tweeting and blogging long enough to write something a bit more academic, usually about housing. I have a paper in the current issue of the journal Housing, Theory and Society. It looks at Uncertainty, expectations and behavioural aspects of housing market choices. The paper is coauthored with my good friend Ken Gibb from Glasgow University.

Here’s the abstract:

Housing is a complex commodity and housing market choices carry with them substantial economic and social consequences for the households making them. Housing market decisions are complex, uncertain and involve expectations-formation. This paper argues that the standard economic theory of decision-making under uncertainty – expected utility theory – is particularly ill-suited as the basis for understanding such complexity. The paper then explores alternative avenues for potential development, reviewing the key characteristics of owner-occupied housing markets and housing search, and examining how the resources of institutional and behavioural economics could be used to inform our understanding of the residential mobility process. The paper concludes by outlining an agenda for empirical research. [Read more…]