Market Housing Issues, Problems and Solutions Stephen Nickell Chair of the National Housing and Planning Advice Unit Presentation at the Cabinet Office, 19 th May, 2008. Stephen Nickell is Warden of Nuffield College Market Housing What has been happening?
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Issues, Problems and Solutions
Chair of the National Housing and Planning Advice Unit
Presentation at the Cabinet Office, 19th May, 2008.
Stephen Nickell is Warden of Nuffield College
House prices, house-building, households, incomes.
House prices, house-building plans, households.
Command and control, incentives.
Basically, the “price” of houses is fixed at the level at which the demand for houses today is equal to the fixed stock available today.
In the recent past, demand has been shifting to the right more rapidly than the stock (which moves to the right by around 3/4% perannum).
So house price inflation depends on how fast demand rises relative to the available stock.
Over the short term, house price inflation is dominated by the speed of the demand shift. Over twenty years, however, the rise in the stock is “big enough” to make a significant difference to the overall rise in house prices over this period, and hence to the average rate of house price inflation.
Typically, the price of houses exceeds, often substantially, their replacement costs (ie. the costs of rebuilding). The difference is the value of the land.
The Supply Side
Suppose the planning regime forces builders to raise the proportion of “cheap” (small) homes. This will have two effects.
What about the policy of cutting stamp duty to first time buyers (FTBs)?
Command and control (CC)
Financial Incentives (FI)
Regional spatial strategies, local development frameworks, LA land supply (PPS 3).
Thames Gateway, growth areas, growth points, eco-towns.