Role of housing in cities: How does it vary and why does it matter?

Andrew CarterCentre for Cities

April 2014

Role of housing in cities: How does it vary and why

does it matter?

Cities matter to the national economy

But their performance varies

National recovery has been going at different speeds

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

UK needs more houses

But 3 pieces of evidence show variation in housing

1. Gap in ability to get a mortgage

2. House price growth since the crash

3. Housing supply is just one element of housing problem

… meaning the problem is not the same everywhere

And even within cities there is variation

Policy should reflect this

Milton Keynes shows that it can be done…

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

Questions?Andrew Carter

a.carter@centreforcities.org

020 7803 4318

07900 168457

@AndrewCities