Return to Media Centre article list  //  Visit our main website at www.carltonandco.com

Boosting the UK’s economy: Housing – the key to growth?

17/07/2012 12:03

Having followed with interest the latest developments in the housing crisis, we couldn’t have agreed more with business secretary Vince Cable when he said that spending on housing was the obvious way to kick-start the economy, as reported in the London Evening Standard: http://bit.ly/NMi6A1.

With an increasing demand for affordable houses, but very little being done in the way of financing new developments, the government should indeed be looking into ways of unlocking sustainable finance for a sector that could give the economy a much-needed boost.

The potential of housing in overcoming the recession

It’s great that Mr Cable can see the potential in affordable housing to help kick-start economic growth. In the midst of the current recession,

  • tax receipts are lower than expected,
  • spending rates are much higher,
  • and as a result, there is an overall lack of progress in cutting the deficit.

But when we look back – as Mr Cable suggested – at the crucial role that the housing sector played in the 1930s, we can see how housing could once again provide a solution in overcoming this tough climate.

The banking crisis hindering housing development

The 1930s saw an annual 3% rise in economic growth largely due to the development of 300,000 houses every year for five consecutive years. But now, thanks to a lack of public funds and the additional complexity of a banking crisis, traditional sources of financing new housing are scarce. And the consequence of all this is that we’re building around 100,000 new homes per year against a target of circa 250,000 new homes. Demand continues to rise and affordability issues continue to get worse.

The solution for increasing public-sector housing 

But Mr Cable has it right when he says that looking at ways of increasing public-sector housing should be high on the government’s agenda. Indeed, Carlton & Co are constantly working to provide innovative solutions to fund new housing developments and attract large scale institutional investment into this crucial sector, which will provide long-term benefits for housing associations and investors alike.

While banks are resting on old loans to housing associations, there is the idea that the Bank of England could buy these assets on the condition that banks use the liberated funds to provide new mortgages, development finance and long-term commercial loans. Also, don’t forget institutional investors who are sitting on large capital reserves and looking for suitable investment opportunities. The housing sector is the largest ‘untapped’ asset class in the UK and provides a major opportunity for institutional investors and housing delivery partners, including housing associations / registered providers, local authorities and developers.

Both options could be a great start – not only in boosting housing supply, but also by creating new and much-needed jobs within the construction sector and throughout the supply chain. By providing additional funding solutions for affordable housing, could the UK experience housing led economic growth to rival that of the 1930s?

 

 

 

 

 

 

 

 

 

 

Leave a reply

required

required

optional


© 2012 Carlton & Co. All rights reserved.  |  T 0330 102 5525  |  F 0845 508 6268  |  E enquiries@carltonandco.com  |  Legal  |  Privacy
Carlton & Co Consultancy Ltd is registered in England & Wales at 15 Parsons Court, Welbury Way, Aycliffe Business Park, County Durham, DL5 6ZE.. Company number 06079709.
London Office: Berkeley House, Berkeley Square, London, W1J 6BD
Northern Office: Carlton House, 15 Parsons Court, Welbury Way, Aycliffe Business Park, County Durham, DL5 6ZE

a Carlton & Co. project »created by happyleaves »