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The Role of Housing in Cities: Variations and Economic Implications

Housing plays a crucial role in urban economies, contributing £18bn and supporting employment. However, high house prices hinder migration and economic mobility. The performance of cities varies significantly, illustrating a need for tailored housing policies that address local conditions. Evidence shows disparities in mortgage accessibility, house price growth, and housing supply challenges. Solutions include boosting land supply, devolving land-use planning, refining financial incentives, and increasing competition in the housing market. Understanding these dynamics is vital for effective urban policy.

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The Role of Housing in Cities: Variations and Economic Implications

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  1. Role of housing in cities: How does it vary and why does it matter? Andrew Carter Centre for Cities April 2014

  2. Anomie – a poor sense of belonging, UK in detail Geographic map Proportional map Label areas

  3. Cities matter to the national economy

  4. But their performance varies

  5. National recovery has been going at different speeds

  6. Important for shelter and for economic reasons . . . Positively: • Contributes £18bn to the economy • Building 100,000 homes could boost national GDP by 1% • Employs 250,000 people • Every 1 new home supports 1.5 new jobs • £1 spent generates additional £2 • Quality of place offer Negatively: • High house prices reduce migration & household formation • Drives up wages (which drive up house prices) • Encourage ‘inefficient’ investment decisions • Raises housing benefit expenditure

  7. UK needs more houses

  8. But 3 pieces of evidence show variation in housing

  9. 1. Gap in ability to get a mortgage

  10. 2. House price growth since the crash

  11. 3. Housing supply is just one element of housing problem

  12. … meaning the problem is not the same everywhere

  13. And even within cities there is variation

  14. Policy should reflect this

  15. Milton Keynes shows that it can be done…

  16. Need a placed-based housing & economy policy agenda • Boost land supply • Devolve land-use planning • Refine New Homes Bonus incentive • Remove caps on borrowing for housing investment • Introduce greater competition in house-building industry • Encourage collaboration within housing markets

  17. Questions? Andrew Carter a.carter@centreforcities.org 020 7803 4318 07900 168457 @AndrewCities

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