Housing unaffordability is a major barrier to progress in Britain today and home ownership remains a distant dream for many younger and low-income households. While affordability can be improved through increasing supply, it has been difficult to determine the quantity of new homes required. This controversial problem was addressed by Professor Geoff Meen and colleagues who, in the early 2000s, first developed a model to predict the effects of supply on affordability.
The model showed that supply increases would have to be both significant and sustained to have a meaningful effect. In 2017, these findings were used by the government as the basis for its radical policy decision to target an additional 300,000 new homes per year.
Nevertheless, housing supply increases alone are unlikely to solve affordability problems and Reading model-based research has expanded from its roots to consider the demand side of the market as well. This has helped policymakers to understand the effects of wider economic and demographic shifts, informing policies related to tenure, financial deregulation and ‘right to buy’ sales, as well as generating evidence for the geographical targeting of housing investment in high-demand areas and the effects of different approaches to land-use planning.
Many of the results were brought together in a 2020 book by Professor Meen, co-authored with Professor Christine Whitehead of the LSE, Understanding Affordability: The Economics of Housing Markets. Recent Reading work, conducted with Alex Mihailov and Yehui Wang, has concentrated on the under-researched area of housing market risk, the implications for forecasting and the reasons why house prices have failed to decline (as many predicted) during the COVID-19 pandemic.
Find out more
View the full impact case study on the REF 2021 website: Developing a Housing Market Model to Improve Housing Policy