Kenneth G. Willis and A. Graham Tipple
The rigorous application of techniques and methods of analysis, such as those outlined in this book, to housing research and policy decisions will improve judgements on housing issues. The purpose of applying methodology is to improve consumer satisfaction with housing, and promote economic efficiency and greater equity (fairness) in housing policy. It is hoped that substantial improvements can be made to the design and pricing of housing projects and to the operation of housing markets by making the analysis of housing projects and policies more technical, objective, and informed, and less subjective, political and ideological.
Few commentators on the state of the housing market in any country express satisfaction with the outcome of their respective country’s housing policies. Irrespective of their ideological positions, subject or discipline orientation, researchers tend to agree that past policy has failed. After decades of state intervention in housing in most countries, the physical manifestations of housing problems still exist: shortage of supply leading to homelessness, long waiting times to acquire houses, overcrowded households and squatting; houses in poor condition, lacking amenities and highly priced in relation to income.
Public housing projects and housing policy may be seen as a response to market failure. Market failures (monopoly, technological externalities, uncertainty and inequity) are traditional reasons in welfare economics for government intervention (Willis, 1980). Externalities in housing might encompass public health concerns and urban blight because of prisoner’s dilemma problems (giving rise to neighbourhood renewal schemes). Equity is commonly thought of in terms of income distribution (housing benefits, public housing for low income groups). However, the results of housing policy do not closely accord with such welfare maximising objectives. Many aspects of housing policy tend to be inefficient and inequitable. For example, owner occupiers receive