Decades of failed housing policies mean we are currently building around 100,000 fewer homes than required to keep pace with demand each year. Our latest report, Cities Outlook 2013, sponsored by the Local Government Association, shows that only by putting place back into housing policy can we provide a much needed boost to the UK economy, and take a big step towards resolving this crisis over the long term.
Although the UK as a whole needs more housing, this does not play out uniformly across the country. Economically successful cities, where demand for housing is high, urgently need new homes; they are the most unaffordable places to buy in the country. Failure to ensure that the supply of new housing keeps pace with demand in cities like Cambridge, Brighton and Reading risks damaging their local economies. If residents cannot access housing, and if new people are not able to move and work in these cities, then employers struggle to recruit and businesses struggle to grow. In these places, policy must focus on increasing the supply of new homes.
By contrast, in cities such as Burnley and Bradford, housing is more affordable but the number of existing homes that are standing empty is relatively high. In these places, where demand for housing is relatively low, incentivising new development will be more expensive and difficult, and ultimately is unlikely to help the local economy. Instead policy should empower these cities to focus on dealing with high vacancy levels and improving the quality of existing houses, so as to improve the quality of life of local residents, and help make areas more attractive to businesses.
Our analysis shows that, in the short term, the biggest opportunity to boost housing supply is by ensuring initiatives designed to kick-start stalled housing schemes, such as Get Britain Building, are explicitly targeted at those cities where economic growth is strong, demand for housing is high, and affordability is constrained. The scope to increase development via this route is potentially significant: of the 400,000 units on stalled sites across England, over 118,000 of these are in our ten most unaffordable cities.
If successful, such an approach would also provide a significant short term boost to the national economy. Research suggests that delivering an additional 100,000 homes in the year ahead would support the employment of up to 150,000 people, including up to 90,000 low skilled positions, as well as providing a 1% boost to the national economy.
Cities Outlook clearly demonstrates the importance of putting place at the heart of housing policy, empowering cities to respond to their local economic circumstances. It will take time to reverse decades of failed housing policy, and other, more significant reforms are required to ensure cities can fully respond to their local housing needs. But, in the short term, Government should work with cities where demand is high and affordability is constrained to help them get development moving. Taking a cities-based approach will get us on the right track to resolving the housing crisis, and help kick-start our national economy.
* Ben Harrison is Director of Partnerships at Centre for Cities.