Housing investment can revive economy | News | Inside Housing

Housing investment can revive economy | News | Inside Housing

Paul Johnson, director of the Institute for Fiscal Studies and a former civil servant at the Treasury, told delegates at the Chartered Institute of Housing’s annual conference yesterday that government-backed lending to the housing sector could ‘revive the economy’.
‘There is scope for the government to stand behind some lending which would allow money into the housing sector at cheaper rates. There is more probability of that in the housing arena than in all the other competing arenas,’ he said.
Mr Johnson’s comments were mirrored by think tank Centre Forum which yesterday called on the government to create a new role for housing associations by guaranteeing their bond issues. This would enable them to build far more homes and offer cheap, fixed-rate mortgages to the open market at a reduced cost.
The plan would see the best performing landlords contract to developers to build more homes that could be either let or sold.
Mr Johnson also warned of chancellor George Osborne’s proposed spending cuts in 2015/16 and 2016/17. ‘We’re still in the foothills of the public spending cuts,’ he said.
Even if the government reduced spending as planned, including a possible £8 billion worth of further welfare cuts after 2015, government debt would remain above 40 per cent of gross domestic product, he said.
Philip Coggan, Buttonwood columnist at The Economist, also called for the government to consider more investment in housing to drive growth: ‘The simple answer to the current housing demand crisis? Build more houses, build more flats and employ people to do it.’