Monday, July 16, 2007

Housing Affordability - The Contrast between Britain and Germany

Britain's new Prime Minister Gordon Brown last week promised that 3m more homes would be built in the UK by 2020. ­Surplus public-sector land would be used for house-building, local councils would be given greater freedom, and incentives, to encourage building and planning rules would be streamlined, all while protecting “greenbelt” land.

Germany builds about 350,000 houses annually compared with the UK's output of 160,000-190,000 and houses are much more affordable.

There were 93,000 housing units built in Ireland in 2006.

In Switzerland where there is a high degree of decentralisation and cantons have significant tax raising powers, real house prices haven't increased since 1970!

Traditionally, it has suited Labour controlled city councils to keep population in the large UK urban areas while the Tories have restricted building in the countryside.

On this week's BBC Politics Show...

Some of us feel a quiet satisfaction in knowing that, on paper at least, the roof over our heads is making us rich.

The extraordinary rise in house prices over the last few years has made millionaires of some quite ordinary families. And anybody who invested in bricks and mortar some time ago can afford to feel smug. But what about our children?

In our heart of hearts, most of us aren't really comfortable with the idea that young people starting out in life, with good but not specially well-paid jobs, have little chance of placing a foot on the bottom rung of the housing ladder. It means people have to commute further, live in overcrowded accommodation, put strain on families and harm the labour market flexibility.

Failing foundations?

Most experts say the real reason for the upward pressure on house prices is the simple economics of supply and demand. Family breakdown, longer life expectancy and immigration contribute to 230,000 new households being formed in England alone every year. But we're only building around 160,000 new homes.

Too many people chasing too few houses equals price rises. Why can't we get this right? Other countries have rising populations, but most of our European neighbours seem to manage to match housing supply to demand. Why can they solve the problem, when we can't? Paola Buonadonna reports from Germany.
BBC Politics Show - Housing Contrasts: Germany and Britain