Homes England commissioned Alma Economics to conduct research to assess the impact of housing growth and affordability on UK productivity.

Our report presented the outputs from both econometric and case study analysis of housing and productivity, including a novel application of Qualitative Comparative Analysis (QCA). From both studies, we were able to assess regional impacts and deep-dive into impacts on local areas.

Key findings:

• There is a statistically significant impact of rising housing costs and affordability challenges on the productivity of London and nearby regions.
• The results imply that a 5% increase in housing stock (equivalent to 187,000 new homes in London) would be associated with a 10% reduction in house prices and a 3.1% increase in productivity.
• Outside the South East, the study finds little evidence of a relationship between housing affordability and productivity from the econometric analysis, although this is revisited in the case study analysis with techniques better suited to smaller geographies.
• The case study analysis found that smaller industrial clusters around the UK can be important drivers of productivity growth.

The overall conclusion is that building more homes in the right areas can support wider economic growth objectives.

Read the report here.