Whose housing crisis?

Two competing views of the housing crisis are offered. The first is that housing outcomes can be ‘corrected’ within the current political economy – that incremental remedies and ‘fixes’ can be applied, enabling business as usual. The second is that housing outcomes signal a much deeper crisis rooted in fundamental economic processes. Addressing the question whose housing crisis? this chapter asks whether housing stress points simply to an inter-generational crisis manifest in the hardships of ‘generation rent’ (which can be remedied through various supports) or whether there are processes at work that threaten a more pervasive socio-economic breakdown. Issues of inequality, social cohesion and prosperity/wealth are also examined.

The housing crisis

This chapter begins by detailing the outward characteristics of the housing crisis including income to housing cost ratios. It then looks at different ‘framings’ of that crisis, as a product of inadequate supply or a refunctioning of housing’s purpose, manifest in new patterns of consumption. The chapter then goes on to explore the nature of housing supply – a combination of new homes and second hand housing - and the relationship between planning regulation and market processes. The wider political economy of housing is then explored ahead of a more detailed account of housing inequalities and the onward structure of the book.

An exit strategy

The closing chapter explores what might be done immediately to assist households without the homes they need and what might be done in the longer term to shift the function of housing in the economy – de-commodify it and deliver a ‘right’ to housing. There is a need for more planning, essential for the coordination of infrastructure investments that foreground housing development. London’s approach to managing overseas’ investment pressure must be aligned with that of other global centres. The public sector’s role in direct housing provision must be restored. And space must be created for a broader set of housing delivery models, including self-build. In the longer term, patterns of housing consumption can only be shifted through tax reforms that incentivise work over the accumulation of housing wealth. Banks need to prioritise lending to businesses over housing. And the planning system should distinguish between housing as an essential social infrastructure and housing as a financial asset.

Local pathways to crisis

Returning to the idea of housing access/affordability as a wicked problem, this chapter explores 6 critical explanations of the housing cost crisis, showing how these explanations intersect to produce a broader narrative account of the political economy of housing outcomes. The chapter looks at impediments to increasing housing supply, the role of direct (overseas) investors in the London housing market, reliance on volume housebuilding (the lack of plurality in the UK model of housing production), the associated reliance on ‘build to sell’ (and the lack of space for alternative models), the impact that the tax treatment of housing has on consumption and housing supply, and the role that credit supply has on house prices and housing costs.

Housing’s economic context

Housing has long been implicated in the productive economy, providing a focus for manufacturing, construction and material consumption. The privatisation, assetisation and financialisation of housing in the twentieth century has broadened and deepened its economic function. This chapter examines the changing profile of the UK economy and the greater centrality today of services related to real estate and debt securitisation. It explores the idea of a ‘credit switch’ in the latter half of the twentieth century into the financialised built environment and the implications of that switch for both the wider economy and public revenues. The chapter explores the broadening role of housing in the UK economy and implications for productivity, workplace earnings and housing affordability (relative to those earnings). The tax treatment of housing – and various instruments of financialisation - are presented as critical scaffolding for this economic shift, which is theorised/explained using a range of key literature.

A wicked problem

Delivering broader access to decent, affordable housing is a wicked problem – a seemingly intractable challenge that has incubated in a political space. There are numerous competing explanations of the housing cost crisis and each explanation reveals a particular political leaning and a preference for either incremental action (aimed at protecting the status quo) or deeper structural change, which would be difficult to achieve given that the housing crisis is differently experienced depending on the market position of particular groups and actors (generating divergent self-interest). This chapter unpacks the nature of the housing crisis as a wicked problem, showing how and why remedies are highly contested and single actions are unlikely to deliver the fundamental change that is needed – largely because housing has become the centre of economic gravity in many countries, owing to the financialisation of land and housing and increased reliance on asset sheet growth, as a substitute for productivity growth.