Housing Need or Housing Demand?

At a recent webinar we attended on the housing crisis, one person commented,

“The core of the housing problem is that housing systems are dominated by market logics, so they respond to demand not housing need.”

So what’s the difference?

A House of Commons Library briefing notes:

Although there is no set definition of housing ‘need’ and ‘demand’ they can broadly be described as follows. Housing ‘demand’ is a market driven concept and relates to the type and number of houses that households will choose to occupy based on preference and ability to pay. Housing ‘need’ is an indicator of existing deficit: the number of households that do not have access to accommodation that meets certain normative standards. This measure mainly refers to the level of need for more or improved social housing. The term ‘housing requirement’ is sometimes used to combine these two measures to generate an overall picture of the housing market.

It seems pretty clear, therefore, that in order to resolve the housing crisis, we must focus on measures to meet housing need. It is, after all, housing need which leads to renters in London typically having to pay 40% of their income on the rent (up to 30% of income being deemed to be affordable); and it’s why thousands of homeless Londoners are spending decades in so called ‘temporary accommodation’.

Those who focus on meeting housing demand make £billions from doing so. They do this in part, by manipulating the market so that demand always exceeds supply, thereby playing a significant role in maintaining the housing crisis, since need and demand, while different, are not unrelated.

The housing market will not therefore prioritise need over demand voluntarily, so the focus of policy-makers, and crucially law-makers, must therefore consider what measures must be introduced to re-focus on housing need.

One measure for starters – proportionate property tax.