Christine M E Whitehead

From Need to Affordability: An Analysis of UK Housing Objectives

Recent housing policy debates in the UK have shifted away from discussion of housing need to more market-oriented analyses of affordability. This article discusses the principles that lie behind the concepts of need and affordability and the ways in which they have been defined. It then traces the development of policy and debate in the UK with respect to both need and affordability. In particular it discusses the different ways in which policy is specified in different tenures and the extent to which implementation depends upon administrative allocation mechanisms. It concludes that up to the present time the shift in emphasis is more one of rhetoric than of reality and, more fundamentally, that the forms in which current policies are implemented bear very little relationship to those suggested by analysis of basic principles.

Mortgage Product Innovation in Advanced Economies: More Choice, More Risk

Abstract In many developed countries, house prices have been rising rapidly, mortgage debt has been increasing and affordability has worsened. It is in this context that the standard annuity mortgage is increasingly being supplanted by mortgages with non-standard features, such as longer terms or interest-only payments. Many of these new features aim to reduce the borrowers monthly debt service in the initial period of the loan. While these new mortgage types help households to enter owner-occupation and to vary their expenditure patterns, the long-term cost to the borrower cannot normally be less than for a standard product. Moreover, such mortgages can also be more risky: the interest-only borrower does not accumulate equity as an annuity borrower does, and loans with longer terms expose the borrower to greater risk of interest-rate or other economic shocks. As a result both borrowers pay more and the housing finance system may be more fragile. This paper brings together evidence from 13 developed countries about house prices, debt and affordability, and particularly the availability and market share of mortgages with these new features. It analyses trends over the last ten years and discusses the risks of these mortgages compared to standard annuity products.

Planning Policies and Affordable Housing: England as a Successful Case Study?

Over the last two decades England has been developing a system by which the majority of new affordable housing will be produced with the help of the land-use planning system. As such it provides an apparently successful example of a trend observable in many countries of using land regulation to achieve housing goals. This paper addresses both the conceptual basis for this approach and the English experience by first setting out the rationale and principles behind a link between land-use planning and the provision of affordable housing. It then examines how the mechanisms that have evolved in England relate to these principles, both formally and in practice, and then assesses outcomes. Finally, lessons are drawn about the necessary conditions for success and the extent to which English experience is relevant to other advanced economies with similar problems.

Urban housing markets: Theory and policy

This chapter examines certain of the developments in the application of economic theory and in empirical and policy analysis with respect to housing markets in general and urban housing markets in particular. The majority of the material refers to US and UK experience with some English language contributions related to other, mainly European, countries.The main thrust of the chapter is to clarify how the particular attributes of housing, especially those of durability and locational specificity, have been introduced into microeconomic models of housing. On the demand side analysis concentrates on estimates of price and income elasticities and the results that arise from different mode specifications. On the supply side there is emphasis on the importance of distinguishing the factors determining new supply from those which affect investment in the existing stock. Overall housing market analysis is also divided into that which applies to the market as a whole and the very different issues, particularly with respect to market segmentation, which dominate urban models.Turning to housing policy the chapter clarifies the different approaches taken to analysis, measurement and evaluation of policy in Europe and America and examines in detail developments with respect to particular examples of policy concern, including market versus administrative allocation, housing and labour markets, the impact of local taxation and rent control.

Social housing and planning gain: is this an appropriate way of providing affordable housing?

The current mechanism for providing affordable housing through the planning system in England is based on negotiation within the framework of Planning Policy Guidance Note 3 and Circular 6/98. In this paper the authors examine three groups of questions. First, on the development of the policy, they look at how the need for affordable housing is assessed, how the policy evolved, and how it is currently operated. Second, on the principles and potential outputs of the policy they look at how the approach fits into the principles of betterment taxation, what the results are likely to be ‘on the ground’ in terms of price and output of housing, and whether these are consistent with taxation principles. Third, they examine what the evidence is so far on the impact of planning obligations on affordable housing provision. Finally, the authors develop a typology of likely outcomes, particularly regarding who pays for affordable housing.

Land supply and housing : a case-study

Abstract The objective of this paper is to examine the impact of land use planning controls on the supply, price and type of dwellings provided. It first reviews how the role of planning is viewed in Britain. It then examines the literature on both methodologies and outcomes to clarify which relationships are well documented and the merits of an eclectic approach to measuring these effects. The next two sections set out our hypotheses about the different effects that planning may generate and how these were tested within the context of local markets in Cambridgeshire and Hertfordshire. The final section draws out some conclusions about the mechanisms by which planning controls operate to affect the housing market and some implications for policy.

Planning and Affordable Housing in Australia and the UK: A Comparative Perspective

Land use planning systems in Australia and the United Kingdom (UK) share a common history. In both nations, one objective of town planning has been to improve housing conditions for the urban poor and facilitate sufficient housing supply for growing post-war populations, with UK legislation serving as a model for Australia, at least until the Town and Country Planning Act 1947. Since this time however, approaches have diverged. In the UK, housing assistance and the land use planning system have co-evolved, with planning an important tool for securing affordable housing, particularly in England. In contrast, a deep cleavage between urban planning and housing policy persists in Australia. Drawing on a series of studies undertaken separately by the authors over the past decade which concentrate on Australia and England, the paper compares urban and housing policy in both nations, and examines planning system performance in securing new affordable homes.

Causes and Consequences? Exploring the Shape and Direction of the Housing System in the UK Post the Financial Crisis

The impacts of the global financial crisis continue to reverberate around the world. This paper explores its impacts in the UK in general and England in particular in relation to the housing market and housing policy. It examines the underlying trends which were already in place before the financial crisis and the impact of the crisis and the governments policy responses on the housing and mortgage markets. The paper argues that the crisis mainly exacerbated already long established tensions while the current policy solutions have ameliorated, but not fully, resolved these pressures.

Land-Use Planning, Land Supply, and House Prices

There are clearly significant social benefits to land-use planning, but there may also be significant private and social costs which need to be taken into account. In this paper we explore the relationship between land-use planning, the supply of housing land, and the supply and price of housing. It is based on two pieces of empirical research. In the first study, an investigation was conducted of the extent to which land supply, and particularly the operation of the planning system, had affected house prices in Britain during the 1980s, and how far planning had placed a constraint on land supply or simply reorganised that supply. In the follow-up study a single planning area was looked at to examine the extent to which increased land allocations in one area can compensate for constraints on land supply in another. We conclude that the planning system imposes significant costs, which include the exacerbation of price increases in periods of economic growth, but without being able to generate higher housing output during recession. In addition the planning system tends to foster a narrower range of housing types and densities than would be expected in its absence, and so restricts the choice available to consumers.

Responding to the Housing and Financial Crises: Mortgage Lending, Mortgage Products and Government Policies

Abstract The long period of house price growth in markets across the world ended with the US and global financial crisis of 2007/08. The crisis and the consequent recession had profound effects on mortgage market actors – including households, institutions and governments – in most advanced economies, whether or not they participated in this rapid house price growth. Many of the trends observed during the boom, especially the innovations in financial instruments, were reversed. This paper presents evidence on how mortgage markets and stakeholders responded in the initial period after the crash. In particular it reports on a 2009 survey of housing experts from 16 industrialised countries, which concentrated on how each countrys mortgage system responded to the crisis and how governments addressed the problems of borrowers.