Tackling Housing Market Volatility in the UK, Article Review Example

Abstract

This paper is a short summary of the article ‘Tackling Housing Market Volatility in the UK: Part One: Long and Short Term Volatility’, written by Mark Stephens. As well as a short summary of the article, the paper will also include bullet points enumerating the article’s main points, as well as some short questions which can be used as the basis for a discussion of the main issues presented by the author. The article was published as part of an effort to synthesise the work of the Joseph Rowntree Foundation’s Housing Market Taskforce. Stephens himself works at Heriot-Watt University in Edinburgh, Scotland. The article identifies the root causes of volatility and looks to find solutions for the problem.

The article begins with an outline of the housing market situation in the UK in the first decade of the 21st century. It outlines that home ownership in the UK has risen to historically high levels, whilst social housing usage has declined considerably. The so-called ‘mobility trap’ is also discussed, as are the problems of house-building and credit volatility.

The article then moves on to discuss possible solutions for the housing market in the UK. One way of tackling the problem that it elucidates relates to the problem of housing supply. UK governments have been reluctant to add to housing supply in the past, largely for political reasons. It goes on to discuss the confusion which surrounds the bureaucratic process of planning, and how it seems to be weighted towards development in more prosperous areas. The burden for assessing housing need is often placed on local authorities, who feel that they lack expertise. There is no national shared resource to help them.

The current government has cut the social housing budget by 40 per cent, which comes on tops of a gradual decline in the social sector during the last government. Despite government claims that 150,000 new social housing units could be imminent, many of the projects require access to private finance which housing associations simply do not have. There are also financial imbalances in the current system which continue to prevent people having access to the credit that they need to buy affordable housing. The rapid growth of mortgage lending in the first decade of the 21st century contributed significantly to this situation. The author suggests that direct limits on mortgage lending could be one way of dealing with this, with intervention coming when the market looked like overheating. Several types of taxation are discussed as possible solutions too.

The author concludes by highlighting the issues which still exist in the housing market. Short term political policy has shaped much of what happens in the housing sector, with the result that supply is short. He asserts that credit controls and property taxes are one way of reining in volatility.

Main points:

• Housing ownership now beginning to decline in the UK. Private renting rising. Social renting falling.
• Local authorities and central government have struggled to match housing need and supply, for a variety of reasons.
• Tackling underlying balance between supply and demand is key to the issue on a national basis.
• Intervention is required in the financial sector in order to help stabilise the housing sector.
• Taxation and credit controls are the most effective way of limiting volatility in the housing market.

Questions:

• What percentage of people now use social rented housing in the UK?
• What ways of tackling the problem of housing supply are discussed in the article?
• Which tax would be the most useful in restoring balance to the property market?
• Outline the author’s plans for reform of the property tax system.
• What conclusions does the writer draw from his research. Do you agree?