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Is Building More Homes Really the Solution?

As a teacher of Economics, this is a topic of constant debate within our lessons. There is already a plentiful supply of housing in many areas but this rests in the hands of too few owners. One line of thought is why doesn't the government consider legislation to prevent the ownership of more than one home so as to release more property on to the market to satisfy demand? The additional supply of housing will push down house prices and this will then lower rental prices in turn.

As it stands, builders are simply building many small plots so as to avoid having to meet their social housing requirements which is an unintended consequence but a problem nevertheless. There is also an entire generation of late 30's-40 somethings that are not on the housing ladder and are unlikely to be by the time of retirement and will be completely reliant upon housing payments from government to meet the shortfall in their rents. A massive problem is brewing and unless government take more radical action than simply building more homes that only the rich and present home owners can afford, market failure on an unprecedented scale is the likely outcome. [Click on the image to read the full article]

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