HOUSING AND HOMELESSNESS

Housing and Homelessness

Housing and Homelessness

Introduction

The resource, housing, is commodified and allocated by real estate markets in capitalist societies (see entry on Real Estate). There is a market for rental, private home and commercial real estate. Under capitalism, the type and quality of housing that can be acquired depends, like any other commodity, on the ability of the purchaser to pay the market determined cost of shelter. As with all consumer purchases, there are also loan-granting institutions available that will aid in the acquisition of goods by providing money in return for interest. In the case of private housing in the US however, the institutional framework for the provision of loans, or mortgages, is quite complicated and is regulated by the government, in addition to the usual regulation of the banking industry as a whole. Yet, the fundamental restraints remain - you live in a house and in a location that you can afford, whether you own or rent (called type of housing tenure). There is one difference between the arrangements in the US and other capitalist countries: Americans are subsidized in the purchase of single family homes, because the federal government allows them to make a pre-tax deduction of all interest paid on their mortgage. For this reason, renters are automatically discriminated against because no such comparable provision is available for their tax relief.

In the UK, the housing environment is similarly complicated, but the burning issues of accessibility and affordability remain, as elsewhere. Social housing is the main provider of non-owner occupation in the UK. New public housing is negligible and most public housing is being transferred from local authorities to the social housing agencies. The UK housing stock in 1982 consisted of 58% owner-occupation; 10.8% private rented; 2.2% social housing; and 29% public housing. In 2010, the respective figures were 69.8%; 9.7%; 6.6%; and 13.8% (www.odpm.gov.uk).

The owner-occupied segment of the housing market is both a source of economic growth and economic instability in the UK as the Organization for Economic Co-Operation and Development has recently noted (2009). Average house prices are 5.2 times the average earnings at present, compared to the long-term average of around 3.5. Owner-occupiers exploit their housing wealth in the UK through borrowing against the difference in their current house price and the amount of mortgage debt, called equity in the US. This has been an important source of sustaining high consumption levels, particularly in the South-East of England (the wealthiest part of the UK). A recent report, carried out on behalf of the Treasury (the Finance Ministry) noted that the UK has experienced a long-term upward trend in real house prices, 2.4% per annum over the last 30 years. This has created problems of affordability. In order to deliver a trend in real house prices of 1.8%, an additional 70,000 houses each year in England might be required. To bring the real price trend in line with the EU average of 1.1 % an extra 120,000 houses each year would be needed (HM Treasury, ...