The latest report from the Joseph Rowntree Foundation says that the UK housing market volatility has distorted housing choices, driven up repossessions and arrears, inhibited house building as well as increasing wealth inequalities.
The JRF report concentrates on the four main areas it considers most important: housing supply, managing the housing market cycle, providing better protection against house price volatility and developing alternatives to home ownership.
At the root of the problems the report said, is a lack of housing supply. Improving housing supply the report says would reduce but not eliminate long term volatility (rapid fluctuations in house prices). But even a substantial increase in supply today would only maintain the supply at current levels.
They look back over the last 40 years and say in the summary that ‘the UK housing market has been characterised by persistent price instability. However, policy-makers have failed to learn the lessons from past boom and bust cycles, and the current model of home-ownership has become stretched beyond its limits’.
The report acknowledges the importance of the private rented sector, but concludes that this is not a good long term solution, particularly for families with children. ‘This highlights the importance of maintaining an affordable social rented sector as a part of the UK’s mainstream housing system’ states the report.
It points to various tools could be used to reduce the range of the boom and bust cycles such as credit controls as well as council tax and land value stamp duty changes that could be made. They would also like to see a more effective safety net for people that fall into difficulties.
The report also calls for a planning system that facilitates and not frustrates appropriate new developments and supported by the New Homes Bonus as well as other initiatives such as the taxation of vacant land.
The overall message from the JRF is that house price volatility needs to be addressed quickly if we are to avoid another boom and bust cycle and the misery that comes with it. ‘The social and economic rewards that would accrue from the creation of a more sustainable housing market are considerable, and urgent action is needed to avoid yet another cycle of boom and bust’ it says.
Taskforce members:
• Kate Barker CBE – author of the Barker review of housing supply and a former member of the Bank of England Monetary Policy Committee.
• Keith Exford – Chief Executive of the Affinity Sutton Group housing association.
• Elaine Kempson CBE – Professor Emeritus and formerly Director of the Personal Finance Research Centre at the University of Bristol.
• Julia Unwin CBE – Chair of the Taskforce and Chief Executive of JRF.
• Peter Williams – Director of the Cambridge Centre for Housing and Planning Research, University of Cambridge.
The Taskforce’s Academic Adviser and author of its report is:
• Mark Stephens FRSA, Professor in Urban Economics at the University of Glasgow.
The Taskforce also received project management support from:
• Kathleen Kelly, Policy and Research Manager at the JRF.
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Tags: house price volatility, House Prices, joseph rowntree foundation, jrf, News
A shortage of housing seems a never ending problem. A significant number of British people do not want vast tracts of the countryside used for new builds (yet again). Maybe we should look at reducing demand rather than increasing supply. Perhaps only UK citizens should be allowed to purchase residential property? This would prevent foreign nationals speculating on UK residential property and reduce volatility as well as demand. It may also free up those properties owned by foreign nationals which are left empty for a large part of the year, particularly in London . Or we could even follow some China’s recent moves on restraining demand by restraining credit.