Housing Market Renewal: Where Is It Now?
Over the past 12 months, housing has become the zeitgeist for economic growth - and rightly so. Cities Outlook 2013 has shown that if we put the place back in to policy by understanding the variation in housing markets between cities, it has the potential to have quick economic wins as well as a more efficient long term strategy.
Those cities that are most unaffordable in terms of home ownership and rental (the top right) tend to have low vacancy rates and should focus on expanding the supply of housing. This will bring the price of housing down, allow existing people to buy property and encourage new workers to live and work there – all of which will boost the economy.
But the more complex story happens in those places that are relatively affordable already but often suffer from vacant or low quality stock (cities in the bottom left). Here, a focus on retrofitting and refurbishment will make the city more attractive, encouraging businesses and workers to the area while also raising house prices for existing owners.
Essentially, this is what the old Housing Market Renewal Initiative (HMR) focussed on. The HMR targeted places in the Midlands and the North of England where the housing markets suffered from low demand and high vacancy rates and the area suffered from low wages and a poorly performing economy.
The initiative ran between 2002 and 2011 and initially worked with 25 local authorities but was expanded to 38 in 2006. In total, between 2002 and 2008, £1.2 billion was spent predominantly on refurbishment (40,000 refurbished properties and 1,100 new builds) and a further £1 billion was allocated to it for between 2008 and 2011. However, the initiative wasn’t without local political difficulties as housing demolition raised concerns about empty streets and destroying social cohesion which led to the formation of community lobby groups.
Unsurprisingly, some of those local authorities targeted by the HMR initiative are found in our top ten cities by vacancy rate. Indeed, seven of the ten cities that suffer most from vacant stock were targeted (shown below in bold).However, due to a combination of austerity measures and the political tensions within the HMR initiative, the Coalition Government scrapped the program and assisted in the formation of a Transition Fund which is managed by the Homes and Communities Agency.
Addressing problems caused by weak demand requires public sector involvement. Government should look to provide incentives and funding - for example, cuts to tax rates on refurbished or renovated properties, or a more efficient use existing policies, such as Get Britain Building or ideas from the Montague Plan - to enable cities to improve their existing housing stock without the priority of new build. This, in turn, will have beneficial impact on the local economy in both the short and long term.
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