I’ve always thought that housing never gets as much attention as an element of economic policy as it should. It gets plenty of coverage as part of social policy, but that reflects the undue emphasis on social housing.
I’m not an economist and so hardly the perfect advocate for this kind of approach, but here’s a bash at some things I think should be covered in a Labour economics of housing:
1) Unbalanced market as a risk to the wider economy
This is in essence, the lesson of the credit crunch. When people are dependent on the value of their home for their savings, their pension and the vast bulk of their wealth, then falls in house price fundamentally undermine people’s economic security. More than that, it poses a fundamental risk to the whole economy: when prices fall, people feel quickly poorer, begin to worry about their future, stop spending and suck demand out of the economy. Such crises of consumer confidence put a lot of firms out of business.
2) Lack of labour mobility.
The coalition have gone on a lot about the lack of mobility in social housing, but overall we have a housing system in which it is difficult to move for the majority of people. It’s not a quick and easy task to move if you own your home, especially when it’s an investment decision as well as a location decision. That doesn’t make for a flexible and mobile labour market when people can easily move to take up jobs, confident that they can easily find secure and affordable housing.
3) Employment in housing and construction
As I’ve covered in previous posts, during the recession the Labour government invested heavily in housing to keep firms in business and maintain employment. Although construction and residential construction is not a large sector of the economy, it is labour intensive and these aren’t jobs that can be moved off-shore to developing countries.