A dramatic increase in new housing could boost the economy by billions of pounds, a former minister has said. Building 100,000 homes each year could add £17.7billion to the economy, think-tank Policy Exchange found.
Tory former housing minister Brandon Lewis, who backed the research, said: “Solving the crisis holds out the dual prospect of placing rocket boosters under our economy and selling a new generation on the ‘British dream’ of home ownership.”
Policy Exchange warned the shortage of new homes and over-inflated house prices are diverting investment from other areas of the economy, harming productivity and reducing consumer demand by eating into household income.
It recommended the Government give businesses a clear idea of what sort of development will secure planning permission.
Report author Dr James Vitali said: “The potential rewards for unlocking the housing market, however, are huge: a more mobile labour force, more productive cities, more investment in productive businesses, a reduced benefit bill and renewed faith in the galvanising ideal of home ownership.”
Meanwhile, the frozen housing market faces a “worst of all worlds” situation due to rising interest rates and high inflation, the Joseph Rowntree Foundation warned.
Darren Baxter, principal policy adviser at the anti-poverty charity, said: “Government must tackle the short-term fallout from the housing downturn and the deeper problems within our housing system.”
