Evaluating UK housing policies to tackle housing affordability
Joanna Poon School of Architecture, Design and the Built Environment,
Nottingham Trent University, Nottingham, UK, and
Dean Garratt Division of Economics, Nottingham Business School, Nottingham Trent University, Nottingham, UK
Purpose - The purpose of this paper is to present an analytical summary of UK housing policies. It aims to evaluate UK government's housing policies, before and after the publication of the Barker Review, to tackle affordability issues in the owner-occupied sector. It examines the extent to which housing policy contributes to or alleviates the problem of the affordability of owner-occupied housing.
Design/methodology/approach - This paper evaluates the impact of UK government housing policies since 2000 on housing affordability by analysing their impact on the dynamics of housing demand and supply.
Findings - The Barker Review, which applied simple economic ideas and techniques in analysing the owner-occupied UK housing market, argued that increases in new housing supply would help to improve housing affordability. The second Barker Review suggested that changes to the planning system were needed in order not only to increase new housing supply, but to make housing supply more sensitive to changing demands. The Barker Reviews brought about a major re-think in government policy towards housing, particularly relating to new build and the planning system. However, the heavy reliance on the private sector to provide additional housing has reduced the effectiveness of policy changes. In addition, the adoption by the government of "demand-side" housing policies has done little to negate the volatility of UK house prices or to raise the overall affordability of owner-occupied housing.
Originality/value - This paper reflects on government failures in UK housing policy in addressing the affordability of owner-occupied housing. The findings will be of interest to policy makers and housing researchers.
Keywords Affordability, Barker Review, Housing, United Kingdom
Paper type Research paper
1. Introduction UK house prices have come to display two well-known characteristics. These can be seen in Figure 1. First, they have increased over the long term and have done so at a rate that not only exceeds the growth in consumer prices, but also the growth in household incomes. To put this into context, between 1969 and 2010 while nationally UK house prices grew by a factor of 47, consumer prices grew by a factor of 12, while the income of the household sector grew by a factor of 33. Because the long-term increase in the price of housing has been greater than that in the price of other goods, property has become more expensive relative to other goods. The high income elasticity of house prices has also meant that the levels of mortgage debt on household balance sheets have become larger relative to household incomes. This makes the UK household incomes more sensitive