Building a single house helps to generate £316,000 for the UK economy, according to a report by design and consultancy group Arcadis.
The report, Building Homes – Making Places, said every newly-built house in the UK creates an economic ripple effect, with £250,000 going directly into the economy through job creation and taxes, £53,000 going into businesses through direct spending, and £13,000 going into local communities through increased investment in local services.
“The benefits of building more homes are much greater than previously thought,” said Peter Hogg, a regeneration spokesperson for Arcadis.
“Following the shock election result, government must now work closely in cross-party cooperation to genuinely deliver on housing promises, along with devolved administrations up and down the country needing to take the lead around starting to build. Public sector construction is something we haven’t seen on any sort of scale in decades,” he said.
The UK is experiencing a housing crisis, with a lack of affordable properties available to first time buyers in particular. This is due in part to a dramatic increase in house prices since the 1980s, and a rise in inflation since the 2008 financial crisis.
Data released on Tuesday by the Office for National Statistics shows the average UK house price was £220,000 in April 2017, £12,000 higher than in April 2016.
The report stresses the importance of investing in national businesses, particularly in the housing sector, given the economic uncertainty caused by looming Brexit negotiations. Without adequate housing and inward investment, it warns, wealth and job creation will suffer.
It calls for a “radical shift” in the way the UK builds, buys and rents homes, emphasising the importance of greater flexibility and affordability — including promoting more diverse developments that are available for a mixture of short- and long-term rents, for shared-ownership and for sale.
Since the cost of “affordable rent” is determined by rental levels in the wider housing market, say Arcadis, building more housing will begin to influence the affordable sector.
In comparison with the £316,000 generated, the report estimates that the cost of building a single house is £163,000 — doubling the value of the original investment.
Other key findings:
- £196,000 in job creation and profit. Historically, the construction industry employs 1.5 full-time equivalent workers for a year to build a typical house.
- £32,000 spent in the local area on furnishing and decorating.
- £31,000 reduction in government’s housing benefit bill. This is based on the idea that housing each of the 4.6 million claimants would become cheaper.
- £12,000 generated through local council and property taxes.