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Housing can boost the economy, parties agree

News

Published: 3 October 2012 | Author: Bernard Clarke

Each of the main political parties continues to see housing as a potential source of economic growth.

In his speech to the Labour Party conference earlier this week, shadow chancellor Ed Balls called for the proceeds from the sale of forthcoming 4G radio frequencies to be used to fund a major boost to the housing sector. He suggested that funds from the sale could be committed to the construction of 100,000 "affordable homes to rent and to buy," as well as a two-year stamp duty exemption on the purchase of properties of up to £250,000 by first-time buyers.

In March, an earlier stamp duty exemption for the purchase of properties up to £250,000 by first-time buyers came to an end. Our data does not provide clear evidence about the impact of the stamp duty exemption on the number of transactions over the longer term. It is clear, however, that it boosted the number of purchases in March, as first-time buyers rushed to complete before the deadline. The surge in activity during that month was then followed by a decline in April, before the number of transactions returned to more "normal" levels.

The shadow chancellor estimated that sale of 4G radio frequencies would raise up to £4 billion, which could be used to create "hundreds of thousands of jobs and get the construction industry moving again."

The Conservatives have also targeted construction as an "engine for economic growth," with a range of initiatives, including funding for NewBuy and FirstBuy, the removal of affordable housing commitments for developers, state guarantees for infrastructure projects and housing, a boost for homes in the rental sector and the removal of planning restrictions.

During interviews at last month’s Liberal Democrat conference, the party leader and deputy prime minister Nick Clegg spoke of plans to enable parents and grandparents to use their pension savings to guarantee mortgages for younger buyers. However, no further details of this initiative have been published so far.