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Improving the Functioning of the Housing Market in the United Kingdom

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  • Christophe André

Abstract

A well-functioning housing market is essential for economic prosperity and well-being. A combination of favourable economic and financial conditions and tight housing supply led to sharp increases in real house prices between the mid-1990s and end 2007, which spurred household consumption. While this boosted output growth, economic imbalances and financial weaknesses mounted, leaving the economy vulnerable to the global financial crisis. Current land use planning policy is excessively restrictive, making supply unresponsive to demand and contributing to creating housing shortages and reducing affordability. While additional supply in the private rental market provides an alternative to homeownership for a significant number of households, social housing waiting list numbers have increased rapidly over the past decade. A reform to replace top-down building targets with incentives for local communities to allow development is underway, but the outcomes are somewhat uncertain. Housing taxation is regressive and encourages excessive demand for housing. More effective taxation could help contain demand and stabilise the housing market. Relying more on long-term and diversified funding for mortgages would also improve the stability of the housing market. Améliorer le fonctionnement du marché du logement au Royaume Uni Un marché du logement performant est indispensable à la prospérité économique et au bien-être. Des conditions économiques et financières favorables conjuguées à des tensions sur l’offre de logements ont entraîné une flambée des prix réels de l’immobilier résidentiel entre le milieu des années 90 et la fin de 2007, ce qui a dopé la consommation des ménages. Cela a stimulé la croissance de la production, mais les déséquilibres économiques et financiers ont pris de l’ampleur, rendant l’économie vulnérable à la crise financière mondiale. La politique actuelle d’aménagement du territoire est trop restrictive, ce qui a pour effet de rendre l’offre peu réactive à la demande, contribuant à créer des pénuries de logements et à réduire l’accessibilité financière à la propriété. Tandis qu’une offre supplémentaire sur le marché locatif privé constitue une alternative à l’accession pour un nombre substantiel de ménages, les listes d’attente dans le secteur du logement social se sont rapidement allongées durant la décennie écoulée. Une réforme est engagée pour remplacer les objectifs de construction déterminés de manière centralisée par des incitations octroyées aux collectivités locales pour qu’elles autorisent des projets immobiliers, mais les résultats sont assez incertains. La fiscalité du logement a un caractère régressif et encourage une demande de logements excessive. Une imposition plus efficace aiderait à contenir la demande et à stabiliser le marché du logement. Un recours accru à un financement à long-terme et diversifié des prêts hypothécaires renforcerait également la stabilité du marché du logement.

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File URL: http://dx.doi.org/10.1787/5kgc42th5df2-en
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Bibliographic Info

Paper provided by OECD Publishing in its series OECD Economics Department Working Papers with number 867.

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Date of creation: 25 May 2011
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Handle: RePEc:oec:ecoaaa:867-en

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Keywords: housing prices; household saving; household wealth; property taxation; housing markets; United Kingdom; construction; mortgage markets; housing policies; land-use planning; épargne des ménages; fiscalité immobilière; marchés hypothécaires; marché immobilier; patrimoine des ménages; aménagement du territoire; politiques du logement; Royaume-Uni; construction; prix des logements;

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