Creating the Conditions for Growth by Christine Whitehead and Tony Travers with Kathleen Scanlon and Melissa Fernández, LSE London, London School Of Economics. October 2013
• “House building activity is beginning to pick up, especially in London and the South East. However, the period since the financial crisis has been disastrous for investment, worsening the longer-term shortages of both market and affordable housing.
• This essay draws some lessons from the last few years about how to support expansion and bring about a step change in housing investment to meet longer term requirements.
• There are three strong arguments in favour of increasing housing output as quickly and sustainably as possible: first, housing is a core contributor to economic growth; second, the housing requirements of a rapidly growing population must be met; and third, the capital in particular needs far more affordable housing to provide for Londoners across the income scale.
• The decline in housing investment since the mid- 2000s has been a particular drag on the economy, leaving unused resources which could readily be employed to expand output and generate multiplie and spillover effects that would benefit the whole country.
• In 2012, The Berkeley Group commissioned Ernst & Young to analyse its economic impact from the start of the financial crisis in 2008 to 2012.
• That report identified that, despite the wider economic problems within the UK, Berkeley had expanded its economic activity to some £2.6 billion in 2012, delivering 13,000 new homes over the previous five years. This represented an increase in the number of new homes built annually by 13% against a 35% reduction in the number of new homes built in the UK as a whole. At the same time, this output sustained over 16,000 jobs in 2012.
• While some of this economic contribution could fairly be attributed to Berkeley’s strategy and knowledge of the market, much relates to the conditions which allowed Berkeley to invest and grow. In particular, the attractiveness of the UK’s world position and longer term stability created a demand particularly from international buyers which provided confidence underpinned by forward sales to commit large housing developments to construction.”