Government Policy and Supply of Housing

November 22nd, 2007 | housing -

Suggest various ways in which the supply of houses could be increased in an economy and in particular, explain how governments could help the process?

The UK housing market suffers from a shortage of supply. Last year, there was a record low in the number of houses being built. These are various policies to help increase the supply of houses.

1. Loosen Legislation about building on Green belt land.

The government can make it easier for property developers to build on land protected by the environment. This makes it much easier to find new places to build houses. The obvious drawback is the negative externalities associated with the loss of green space. It is likely to meet opposition from pressure groups commited to protecting the environment.

2. Building of Council Houses

This would directly increase the stock of housing. The government can build them in areas where they are most needed. However, it is quite expensive and would take a while. Nevertheless the government would get a rentable income. It could also help key public sector workers.

3. Legislation to requisition brown field sites.

This is areas of cities and towns where there is the potential for new housing to be built. This enables new housing without the loss of the environment.

4. Encourage Geographical mobility.

There is a particular shortage of housing in the South East. It is easier to build new houses in the north. If the government could encourage firms to move, it could also encourage homebuilding in these areas.

5. Government Targets for building houses.

However, government has often failed to meet its own targets, because it gets frustrated by local councils who block the building of new houses.