The 2008 financial crisis in Europe effects have spiralled through the region to affect even the economy of Britain ability to provide for the basic of human wants that is housing. Imbalance in supply and demand of housing from increased demand and low supply stems from the inadequacy of supply of building materials that primarily facilitate the process. According to Stephen Stone whose company tried to acquire concrete building blocks for new home projects, his company had to wait for the materials importation from Germany, which could take several months for arrival. Rise in the demand for houses mainly originates from exponential increase in population hence requiring that the same influx be compensated by increasing the number of houses to accommodate the population rise.
The government is a key player in the microeconomics of policy formation by necessitating people wants through essentially providing economical solutions that focus on the people inabilities. The government of Britain in this case through Chancellor George Osborn developed a scheme to help British citizens purchase homes by providing mortgage funds worth billions of pounds fugitively to subsidise the initial deposit required. However, a greater problem of providing the homes required still incapacitates the scheme considering that labour mostly comprised of foreign workers who had moved from Britain due to the reduction in jobs.
Statistics shows that Britain requires an average of 250000 homes annually to satisfy comprehensively the population of the region however only 88000 homes were completed in 2012, a lesser value to that of 115000 average houses completed four years earlier. The number of houses built continues to retrogress in comparison to those built in the 1920s due to factors affecting the production process. Companies from facing the strict government obligations such as reduction in carbon emission and an unsustainable economy choose to take measures that safeguard their profit margin contrary to increasing sales. House builder companies such as Persimmon have opted to reducing their labour force to reduce cost of operation essentially raising their profit margin while other such as Hanson chose to close subsidiary plants since demand for materials is low. This presents the greatest problem to the efficacy of the scheme since reduction in labour by an aggregate 15% from 2008 reduces overall production rate required to sustain the growing population. This reality according to spokesperson for Hanson directly translates to arguably 50% of the workforce hence adopting the plan will take a considerably longer time for optimal results despite the Chancellor intervention.
The government realising that it might lead to increase in price of homes rather than reducing price of building has adopted measures that loosen the prior restrictions that limit number of houses built by delegating some of the power to local authority. This has improved the number of houses built from an average 100, 000 to 110000. However, the scheme still faces challenges in adaptation such as local council arterial motifs from using their new power to levy higher costs used to sustain the municipals and banks reduced lending capabilities adversely affecting small house builders’ ability to undertake projects. The chart below is a representation of the number of houses required to sustain the population and the statistics from 1950 to 2012. This shows the intensity of the crisis while also highlighting the magnitude in difference throughout the period and to the expected value agreed in 2004 housing market review.
Government represents the number of houses built by government intervention while private represents homes built by private organizations. Expected refers to the number of homes required to sustain the population.