Building more houses would reduce prices!!!!!!

That is what some people believe!  Kate Barker formerly of the Bank of England Monetary Policy Committee and is now a non-executive director of Taylor Wimpey – in the Barker report suggested that more house building would result in lower house price inflation.

Is it true?  Hmm well it is possible to see the theory – with demand held constant more houses would mean prices would fall.  But in the real world?   Thats a different matter – demand would probably rise – what would stop investors and potential second home owners bidding up prices?   This belief also rests on the naive belief that developers see their job as providing houses to meet need.  In the real world developers seek out markets, creating and encouraging demand for specific types of housing and for housing in specific areas.  When a developer comes up with a scheme for 10 houses in a rural setting or 100 in a village or 1,000 next to a town – they have a particular market in mind – whether it’s for the luxury market or for those seeking a change of scenery – meeting local need is not the priority.  

Provision of housing is market not need led – it’s an example of market failure – so we need to change the market!


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