Housing: The Market Doesn’t Work (2015)

From the May 2015 issue of the Socialist Standard

The housing crisis is a messy combination of high demand for homes from people, a shortage of new houses being built, and an insufficient amount of affordable or social housing. This wide gap between what’s needed and what’s available shows that the housing market doesn’t work.

Houses are built to make money for developers and landowners, not because people need them. Developers aim to maximise their profits by building the kind of housing which is likely to bring in the best returns. This will tend to be houses for private sale. Social housing managed by councils and housing associations is a less attractive investment. As a result, the few homes which are being built will only be affordable to a few people. The housing shortage actually benefits the economy, in a weird way. Because demand for new houses is high, some people are prepared to pay a lot, so developers can get away with charging higher prices for new homes. Consequently, house prices have rocketed, and developers and mortgage lenders have raked in the profits.

Thousands of people locally on medium and lower incomes have been priced out of the market, and end up unable to move to better housing. Those with lower incomes, or who have debts, have to rely on the often unreliable end of the private sector or under-funded social housing. For homeless people, any type of long term housing might be hard to find. The housing market shows how the system doesn’t work in our interests.

Reforms have to fit in with how the system runs. Any changes to legislation or reallocation of public funds only last as long as they’re financially viable. Tinkering with the system hasn’t made it work in the interests of the vast majority. So, the economic and political system itself needs to be changed. We need to go from a society where land and resources are owned by a tiny minority to one where they are owned by everyone in common. Houses would be built, goods would be produced and services would be run directly because people need and want them. The financial market would no longer be there, rationing and restricting who gets what. Work would be co-operative and voluntary, without the stresses which come from struggling without enough resources or staff. The only way such a society could be organised is democratically, without leaders. And the only way that society could be reached is democratically, if the majority worldwide wanted it and worked for it.

MF