A 1930s-style building boom could bring back growth
House building after the great depression revived the economy, tackled overcrowding and kept property prices stable for years
Vince Cable, the business secretary, has been pressing cabinet colleagues to adopt the 1930s approach. He thinks house building is the way to get real demand into the economy quickly, and has championed the idea of government guarantees for housing associations. He said in a speech last year that there was a virtuous circle in the 1930s in which higher mortgage demand led to an increase in house building, which in turn led to lower prices and greater affordability, leading to still higher demand. “Houses built by the private sector rocketed from around 130,000 in 1931 to almost 300,000 in 1934 and it is estimated that house building contributed almost a third of all employment increases in this period.”
Super. Sadly, Larry Elliott completely fails to mention that a 1930s style housebuilding boom would be illegal these days. Suburban ribbon developments? The planning system wouldn’t allow it. Large gardens? Can’t have them now, got to put 14 dwellings per hectare.
And there’s no way at all that the planning system will provide plots for 300,000 houses a year.
Which means, as various of us have been saying for years, that you need to reform the planning system first. Get it back to what it actually was in the 30s. Where the plot price was 5% or 10% of the total price of the house, not the current 50% to 70%.
Of course, having done that you’d not need to do anything else, you’d have already solved the problem.