Two of the biggest policy issues in the UK are housing affordability (e.g., between 2002 and 2021, median house prices in London have grown twice as fast as wages) and economic productivity (which is key to growth and prosperity but has stagnated since the financial crisis in 2008).

The London Partnership Board, the Greater London Authority, London Councils, Trust for London, and the G15 network of major housing associations commissioned NERA to analyse the relationship between housing supply and affordability and economic productivity. We worked on this study with Professor Hans Koster from Vrije Universiteit Amsterdam.

Our report explores:

• The quantitative relationship between housing affordability and economic productivity in the Greater London Area;
• How to quantify the economic benefits of targeted and citywide interventions to improve affordability; and
• The methodology we developed and applied and how it might be built upon in the future.

Our study quantifies, for the first time to our knowledge, the effect of housing affordability on economic productivity. It shows a 1% increase in affordability results in a 0.14% increase in productivity. If applied to London as a whole, this equates to a £7.3 billion increase in value add over a decade.

For media inquiries, please contact thomas.mcchesney@nera.com