Economy  

We need to rescue the housing market

Callum Price

Callum Price

If the government does not move quickly, we will be left with a dysfunctional sector, with shortages of labour and materials and less competition. 

It is of course crucial that any support be short-term and self-terminating.

But if swiftly instituted, it should limit the likely collapse in housebuilding and lay the grounds for a strong recovery, preventing massive harm to SME housebuilders and the estimated half a million workers in the housing supply chain.

We have to avoid the mistakes of the last recession, when the Government prioritised propping up prices across the £7.4 trillion residential market, while housing supply fell very sharply and then remained low for a long time.

This is, as highlighted above, only a short-term solution.

Long-term reforms to planning, easier conversion of commercial to residential space, and stamp duty cuts are all critical to achieving the boosts to productivity, growth, and home ownership rates that a fully functioning housing market can bring.

But unless the government acts now, the evidence of the past is that it will take most of the 2020s just to get back to where we were in 2019. Meanwhile the enfeebled sector will be even more dominated by a handful of large housebuilders.

That is a recipe not so much for creative destruction as simple destruction. 

Callum Price is head of external relations at the Centre for Policy Studies