Home economics: The role of housing in rebalancing the economy

Housing has a range of significant effects on economic performance at the national, subnational and very local level. These range from direct impacts, like construction and rent, through to indirect effects, such as household spending and labour market mobility. Housing can have wider regeneration impacts which affect the relative competitiveness and investment potential of an area and – in the worst cases – the social and environmental costs of concentrated deprivation.

In terms of how housing policy interacts with economic policy, the report highlights four main problematic areas, and makes recommendations to address each.

1. Problems with planning and coordination where local planning departments lack the capacity and scope necessary to address the more strategic needs of functional economic areas.
2. Problems with housing finance where current policies favour those areas with high housing demand and inhibit public investment where the residential offer could be critical in attracting inward investment and skills.
3. Problems with land supply in key cities and places where there is scope for rapid economic growth.
4. Problems with regenerating housing and neighbourhoods where there is low demand and weak connectivity to the local labour market.

Many of the recommended measures focus on giving increased powers and responsibilities to subnational bodies, such as local and combined authorities and local enterprise partnerships (LEPs) to enable and encourage strategic planning and targeted action at the local and regional levels.