The long list of organisations calling for more house building and freeing up the planning system continues with last weeks declaration from the International Monetary Fund.
So what did the IMF say?
12. Imbalances in the housing market should be addressed through supply-side remedies. Fundamentally, house prices are rising because demand outstrips supply. The UK has a secular problem with inadequate housing supply, associated with planning restrictions and compounded by depressed housing starts since the financial crisis. Macroprudential and monetary policies can only be temporary palliatives to an underlying problem.
13. New initiatives to spur house building are welcome, but political consensus for further reform is needed. The government has introduced major changes to the planning system to create incentives for local councils to increase available land for housing development, and there are some signs of recovery in housing construction. Nonetheless, key inefficiencies remain. These include: unnecessary constraints on brownfield and greenfield developments; tax policies that discourage the most economically-efficient use of property; and underdeveloped rental markets with relatively short lease terms.
Well with all this from the IMF and EU Commission just shows that all those who support more house building are right!
Well not really. As we have stated before there are both supply and demand issues to consider. We do know that in Cornwall and doubtless other areas, supply is not a problem and the planning system does not act as a constraint on house building. Now that does not mean that there are not areas where there are two few houses being built in relation to demand.
The problem is that we also need to address demand. It’s totally pointless to grant permission for new housing development if the development is designed for luxury use and we also have to deal with the twin drivers of housing demand/need, namely the purchase of housing by the super rich for investment purposes/second homes and the continued rise in population as more people move to the UK than leave.
The IMF is hardly likely to propose policies that conform with these as they fully endorse the neo-liberal view of the world which supports the free movement of money and people regardless of the impact!