Rural Housing and Government Related Supply in the UK - Assignment Example

Planning and Affordable Housing An Analysis of Rural Housing and Government Related Supply Concerns within the United Kingdom Contents Introduction 2Difficulties of supplying general and affordable housing in rural areas 4 The consequences of housing undersupply for the rural areas 6 Future solutions to solve the problem 9 Conclusion 11 Bibliography 12 Introduction The affordability of housing, and the supply of housing, is now being considered as important part of determining the vitality and sustainability of many rural areas. They are also significant ways to enhance the diversity and promote the social inclusion within rural areas. However, the problem that exists within the current era is the fact that there are fewer and fewer affordable homes available, or being constructed, within these rural areas. This is seemingly true regardless of the fact that the overall quality of life in the rural areas of the nation is commensurate with the quality of life within the cities. Studies by a litany of researchers, including Meek (2014) and White (2013) have measured the quality of life, proliferation of services, and overall differentials that exist within rural areas of the United Kingdom as compared to more urban areas; noting that although differentials exist, the size of the disparity of metrics measured is not a valid indication that the rural areas lack in amenities or infrastructure. As for the middle class in the UK, the housing in rural area seems less affordable as compared to previous times in the not so distant past. Similarly, scholarship by Morris (2011) indicated that the life experience of individuals residing in rural areas is generally positive; as compared to that of urban dwellers. The issue at hand is with relation to the fact that inefficiency of use and extremely high demand has created unique market conditions for rural properties and housing within the United Kingdom (Shapely, 2011). The socio-economic difficulty that is in turn represented is contingent upon the fact that individuals within rural areas do not generally have the financial resources that individuals within more urban areas can draw upon. In tandem with this difficulty, increasing demand for properties within rural areas, places individuals that seek to leverage housing within this market at a distinct disadvantage; as supply and demand are meeting at an equilibrium outside of the reach of many stakeholders within society. Jones & Coombes (2013) indicate that this hardship is one that has placed undue pressure on the UK real estate market and one that threatens to reduce the equity of real estate and decrease the upward mobility and life choices that individuals seeking to promote their own interests might otherwise expect to achieve within their lifetime. Figure 1 Net migration within UK, 2000/01–2002/03 (thousands) (Source CRC 2005) As shown in the figure 1, the net migration is positive for rural areas and mixed areas and it is negative for the urban areas. And according to the ONS estimated, the people moved from the urban areas to rural areas are tend to be elder and the rich. And on the other side, the people moved from rural areas to urban areas are tend to be young and poor people. This indicates most people prefer to live in the rural areas from another perspective (Gallent & Robinson, 2012). So providing enough affordable housing in rural area can be of great importance for social stability and development of local economics. (Richard, 2006) Difficulties of supplying general and affordable housing in rural areas One of the first and most prominent difficulties of supplying affordable housing in rural areas is contingent upon issues of overall demand and the way in which existing and available government funding are distributed. For instance, Gilligan (2013) indicated that government funding is almost entirely leveraged towards providing affordable housing within heavily populated regions of the country; as this is obviously where the greater demand exists. As a function of satisfying the largest number of stakeholders with limited resources, the government of course opts to engage affordable housing solutions within densely populated areas first. Figure 2 Ratio of lowest quartile house price to lowest quartile earnings between 1996 and 2006 It is not easy to solve due to these difficulties of supplying general and affordable housing in rural areas which are listed below: 1. High price Due to the relatively weak national macro-control for the affordable housing, the price of the house is mainly decided by the supply-demand market. Because the demand exceeds supply for the houses in the rural area, the price cannot be reduced. Furthermore, although the price of the house is rising, there are still some high-income classes are able to buy these houses, from the other side they sustained the high price of the house in rural area. Therefore, it can be one of the difficulties for supplying houses in rural area. 2. The growing rural population With the rise of the living standard and the development of the local economics, an increasing number of people prefer to live in the rural area because of the better living environment and the diverse of life style. It is kind of “de-urbanization”. This trend lead more and more people move to the rural area, but the growth rate of the affordable housing in the rural area is relatively slow, therefore the number of affordable housing cannot meet the need in the rural area. As the rural population continues to grow, the reduction of the supplying of housing is becoming more and more serious. 3. Limited land in rural areas The land in the rural areas is ultimately limited; as such, it restricts the overall number of the affordable houses. In addition, in the planning process, most of the land in the rural area is planning to be used for the agriculture and animal husbandry, and the land for the human settlement is relatively less. Therefore the shortage of the land for living is also one of the important reason cause the reduction of the affordable housing. (Richard, 2006) The consequences of housing undersupply for the rural areas The ultimate consequence of the issues that have thus far been elaborated on are contingent upon the unique dynamic of increasing demand as increasing price and decreasing demand is evident within the market. Although this is easily explained from an economic perspective, the underlying consequence of an undersupply of housing within rural markets has a profound impact upon the way in which society integrates and what decisions individuals will make within the coming years (Hamiduddin & Gallent,, 2012). For instance, as many individuals of working age within urban areas dream of retirement and leisure within a more laid back setting, two alternatives are available. Either they can seek to compete for housing within an increasingly expensive and restricted rural market; or they can look outside the UK for their retirement. The consequence of the former is frustrating; however, the consequence of the later is devastating to the overall outlook of growth and development within the economy of the United Kingdom (Gallent, 2008). The ancillary reason for this is of course the fact that more and more individuals will give up on seeking housing within the rural communities, regardless of its benefits or how much they may wish to live there; due to the fact that it is simply unaffordable and generally represents an impossibility. As housing undersupply is exhibited on a more and more systemic level, common rules of economics dictate the price can only rise; therebe worsening the situation and decreasing the utility for all stakeholders involved (Gallent, 2009). Figure 3 below illustrates the increase in pricing that has taken place over the past few years. It is essential to note that although increasing prices are expected within any market over time, the rate of change that is exhibited within the United Kingdom, in terms of real estate in rural areas, has grown disproportionately with average changes in salary and/or average changes in the inflation rate or cost of living. Figure 3 Real house prices in selected regions and England, 1969-2002 As mentioned above, due to most people give priority to live in the rural area, the prices of the houses in rural area increased faster than that in the urban area and there are less affordable housing in the rural area. Therefore, the problem seems more serious in the rural area. As the housing price rises and the reduction of the affordable housing in the rural area, some more effect have been caused. For the people living in the rural area, the quality of their lives were reduced because they have a higher housing cost than before. For a plenty number of middle classes, they have few choice to choose where they want to live (Furbey et al., 2001). And this may cause longer commuting distance and reduced labor mobility. Moreover, as the housing price rise, a fraction of people cannot able to buy or rent a house, therefore the homelessness will be increased. As a result, it will exacerbate the social instability. In addition, the family structures and friendship networks were damaged towards some people. Finally high prices will aggravate the gap between rich and poor vulnerable to social instability and it is also a risk to economic stability and overall economic welfare. (Bramley, 2007) According to the Baker’s Report, the consequence of housing undersupplying in the rural area can be mainly concluded below: constraining economic growth, worsening affordability and greater risk of macroeconomic instability (Bevan et al., 2010). Future solutions to solve the problem The following serves as a preliminary and brief listing of some of the most salient potential solutions that the government of the United Kingdom might engage in as a means of lessening the runaway pricing and high demand that exists within the current market for rural homes. 1. Reusing empty buildings In terms of the potential for this approach to work, it must be noted that it does exhibit core shortcomings. Firstly, re-using empty buildings will still require heavy initial investment to bring them up to health and safety standards that are adequate for housing. Likewise, by filling up existing space, the potential to allow the real estate market to develop at its own pace and prosper new areas economically is inherently reduced. 2. Repurchasing ‘Right-to-Buy’ properties This approach bears perhaps the greatest potential. However, it also falls short in that it would require the government to play an even more active role in drying up existing supply and then replacing this supply on the market at a reduced cost; thus creating a profound institutional dead-weight loss for all of society and the tax base. 3. Re-negotiating under-occupation (Commission for Rural Communities 2005) Re-negotiation of under occupation properties could be beneficial as well; yet again, the utility of individuals that might be impacted by this could necessarily be harmed. As has been illustrated previously within the analysis, the focus of the United Kingdom’s rural housing market has invariably been one house for one individual. 4. Redefining PRS leasing Redefining PRS leasing is another valuable option that has a high degree of potential to change the ultimate landscape that has thus far been defined. However, as with the other alternatives that have been denoted, this approach also increases the presence of the central government in the market with respect to setting new standards with regard to lease pricing; a tactic that has not yet proven to be efficient or highly effective within the more populated areas. 5. Increasing the retention of affordable houses (Richard, 2006) Likely the very best approach is to increase the overall retention of affordable housing. This is a way in which the United Kingdom can attempt to tackle the issue from the supply side while reducing the overall cost to the consumer and maximizing the overall number of options that they have available to choose from. Whereas this is a very expensive endeavor, it is likely that such an approach could at least partially ameliorate the current pressures that are felt with respect to the lack of supply and very high demand for homes within rural areas of the UK. Conclusion The essay has effectively discussed the difficulties of supplying general and affordable housing in rural areas. There are totally three main difficulties that cause the housing problem. The first one is the high price of the rural housing due to the imbalance relationship between the demand and supply. The second one is the growing rural population. Finally, the growing speed of rural development is much faster than the growing rate of affordable housing in rural areas; so demand always exceeds the supply. Finally, the reader can understand that core and impactful consequences to this undersupply have been painfully represented in the current economics and developmental level of the United Kingdom’s real estate market. In order for this to be changed, direct engagement on the part of the government will need to be effected. Bibliography Commission for Rural Communities (2005) The State of the Countryside 2005. Bramley, G. (2007). Increasing Affordable Housing Supply. 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