Conservatives and housing – another party that does not understand housing economics!

The Conservative Manifesto says:

We have not built enough homes in this country for generations, and buying or renting a home has become increasingly unaffordable. If we do not put this right, we will be unable to extend the promise of a decent home, let alone home ownership, to the millions who deserve it.

We will fix the dysfunctional housing market so that housing is more affordable and people have the security they need to plan for the future. The key to this is to build enough homes to meet demand. That will slow the rise in housing costs so more ordinary, working families can afford to buy a home and bring the cost of renting down. And it will ensure that more private capital is invested in more productive investment, helping the economy to grow faster and more securely in future years.

We will meet our 2015 commitment to deliver a million homes by the end of 2020 and we will deliver half a million more by the end of 2022. We will deliver the reforms proposed in our Housing White Paper to free up more land for new homes in the right places, speed up build-out by encouraging modern methods of construction and give councils powers to intervene where developers do not act on their planning permissions; and we will
diversify who builds homes in this country.

Once again, as with the other parties, there is no recognition of the need to reduce demand. The mantra is ‘we must meet demand’. The demand side of the equation has to be addressed. This means:

Restricting access to the housing market such that foreign and UK investors are excluded and reducing population growth, which in a UK context is largely a result of immigration.

Again the Conservative party seems not to realise (or just ignores) the fact that we have more houses than households!

As for the assertion that building more houses will ‘slow the rise in housing costs’ that does not accord with reality. Due to the factors mentioned above and many others such as interest rates and earnings, more houses does not equate with lower prices or even a reduction in the rate of increase.

Economic illiteracy it seems is quite common when it comes to housing economics!


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