What is the link between the housing and labour markets?
By Tara M. Sinclair, chief economist Indeed
It has been over a year since the UK housing price crisis first caught the attention of the mainstream media and it has shown no signs of slowing since. According to research from Rightmove, the housing shortage helped property asking prices break a new record in September, and this month Halifax revealed that 68% of UK citizens expect house prices to rise even higher over the next 12 months.
The Party Conferences have seen fresh calls for measures to stabilise the property market. Prime Minister David Cameron promised to scale back planning legislation to support the development of affordable properties for first-time buyers, while Labour leader Jeremy Corbyn called for the construction of 240,000 homes a year.
Alongside housing, employment is of course top of the agenda in the push for economic growth and stability and driving for ‘full employment’ is another key priority for the UK government. However, following a steady period of growth, we are just now starting to experience a slow-down in employment in the UK, while Office of National Statistics (ONS) figures reveal a disparity between the North and South of England in job opportunities. With the labour and housing markets so tightly linked, we must address these two issues simultaneously.
The relationship between the housing and labour markets
Research from Indeed shows that the UK is the third most popular destination in the world for job seekers, with London as the biggest draw. However, the limited housing in the UK and specifically London has made it difficult for workers who wish to move to the region. This pressure is not just confined to the capital – as job opportunities continue to grow in regional hubs across the UK, movement to these areas puts pressure on local housing availability, leading to raised prices.
However, despite the clear appetite for work in the UK, many companies are still struggling to find the right people with the right skills to fill the jobs available. This is due in large part to widespread skills shortages.
Addressing the issue
One way to break this cycle of rising house prices and concentrated job vacancies is to create more opportunities for remote work. By employing remote workers from across the UK, companies can address this issue, while opening up the whole of the UK talent pool and breaking the London housing monopoly.
Developing more affordable homes, as well as considering planning legislation to make it easier to build new homes could also help to alleviate this problem. This can help people to obtain properties that are more in line with their salaries, while supporting employers – particularly small companies – who may not be able to compete on salaries at this time.
Meanwhile, companies struggling to attract talent to less densely populated areas should consider offering other benefits to help entice and retain the most in-demand employees. Some examples include training, more flexible work hours and work arrangements, which are effective ways to draw in the best employees.
A recent study from Indeed uncovered that after pay, flexible working and ‘meaningful work’ are two top priorities for UK jobseekers. It is more important than ever that employers are in-tune with the motivations, priorities and expectations of jobseekers. Being content in the workplace is not just a matter of having a good salary; staff want to feel that they are appreciated and wish to work within a supportive and motivating environment.
There is no short-term fix to stabilising the current housing crisis, or to ensuring a healthy employment market across all regions of the UK. However, considering employment and property issues in tandem could be a step in the right direction for addressing the two markets, which are so intrinsically linked.