Thursday, October 25, 2012

A call for housebuilding

Returning to growth in the UK

"If there is one area that could deliver short-term stimulus and long-term efficiency gains, as in the 1930s, it is surely private house building. The evidence suggests that draconian planning restrictions mean that the stock of houses is three million below and real prices are 35% above the long-run free market equilibrium (Hilber and Vermeulen 2012). The welfare gains from some relaxation of these planning rules are huge and the employment implications of steadily addressing the housing shortfall could be considerable – building 200,000 extra houses per year might employ 800,000." Nicholas Crafts - Professor of Economics and Economic History at the University of Warwick

Posted by chrisch @ 02:17 PM (2166 views)
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10 thoughts on “A call for housebuilding

  • Fantastic news! Economy back on track – Wwwwwonderful!!

    All we need now, is an Olympics every 3 months, and the growth will continue ad infinitum.

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  • Next stop – Triple Dip.

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  • mark wadsworth says:

    Yes, I’d expect a triple dip and then a quadruple dip and so on, like the last recession which went from early 1970s to mid 1990s.

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  • 3 million unemployed don’t necessarily contain 800,000 people with building skills. Is it 4 people working for one year to make 1 house? That puts labour costs alone at about100,000.

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  • Did Cameron know about the Ford closures before he sounded his triumphal trumpet or did he think that amidst the Savile- Plebgate- Cyclist- Romney- Football- Syria furore, nobody would notice the smell and colour of bullsh1t?

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  • …and real prices are 35% above the long-run free market equilibrium

    That’s about right.

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  • You don’t need to relax planning restrictions. Make a law that planing expires within 5 years unless it’s used, and there’s a long, expensive delay before application can be made again. That’ll get the big building companies off their massive land banks and actually doing some building.

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  • Saying we had a double dip recession is misleading. We had one big recession and have since then have been bumping along the bottom (or at least the false bottom while UK Gov/BOE props up the banks). One Qtr we’re up then we’re down, as the margins are normally less than +/-1% the difference is probably as much statistical error as anything else. We won’t get hugely worse until the banks go pop and we won’t get hugely better…. until after the banks go pop. Or we ‘ll just keep bumping along like japan for decades.

    Building houses is a great idea, excpet who is going to fund them? The Banks sure can’t and neither can UK Gov. Maybe they could invest the BoE’s gold plated index linked pension into house building? Not likely.

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  • Building houses is a great idea, except who is going to fund them?

    QE of course – now that UK government no longer cares about raiding the money amassed by UK savers.

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  • @7 Rogue Leader

    Yep. Use it or lose it.

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