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Oxford Review of Economic Policy 2008 24(1):79-98; doi:10.1093/oxrep/grn010
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© The Authors 2008. Published by Oxford University Press. For permissions please e-mail: journals.permissions@oxfordjournals.org

This article appears in the following Oxford Review of Economic Policy issue: HOUSING MARKETS AND THE ECONOMY [View the issue table of contents]

Planning for housing in the post-Barker era: affordability, household formation, and tenure choice

Geoffrey Meen*
Mark Andrew**
* International Centre for Housing and Urban Economics, University of Reading Business School, e-mail: g.p.meen{at}reading.ac.uk
** Cass Business School, e-mail: mark.andrew.1{at}city.ac.uk


  Abstract

The Barker Review of Housing Supply recommended the greater use of market indicators as the basis for providing sufficient land for future housing requirements. Worsening affordability would be a sign that more land is required. However, the traditional approach to land release used by planners is based on trend household projections. The paper shows that this will typically lead to worsening affordability over time. The paper, therefore, develops an alternative economic model more suitable to the post-Barker era, covering both household formation and tenure choice. The model is used to analyse a range of policy issues, including raising home-ownership rates and home-ownership sustainability.

Key Words: housing affordability • economic models • household formation • housing tenure

The work described in this paper was conducted for the Department of Communities and Local Government. The model is also used by the National Housing and Planning Advice Unit (NHPAU). However, the views expressed here are those of the authors and not necessarily those of the government or NHPAU.

1 Equation (1) is a simplification and, strictly should take into account the change in the number of households who are sharing dwellings. Also it should be stressed that HS includes conversions and changes of use.

2 As shown below, strictly regional house-price equations are estimated from which the demand functions can be inferred.

3 In fact, some of the equations include further influences, for example, the house-price equations (see Allmendinger et al. (2005) for full equation details). But those appearing in the table are the key factors for determining the model's properties.

4 This assumes no further Right-to-Buy sales.

5 Total households are still constrained to official projections, but at improved affordability a greater percentage can operate in the market sector.


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