Market signals, planning and social housing

While there are well-rehearsed debates between neo-classical economists and town planners over the way the private housing market interacts with land planning (as well as disputing the nature and effects of market signals), there has been much less said about the effect of planning on non-market housing (and vice versa). Social housing is part of the wider housing system operating in a region. It is both impacted by, and impacts on, the private housing market. The economic literature on social housing, though sparse, does include wider perspectives such as new (and old) institutional economics. Quasi-market approaches, such as the study of internal markets, have been applied to various public sector reform processes, including housing. Applying these market signals ideas to non-market housing is helpful because analysts tend to use a wider array of economic methods. In this paper, the relevant literature is examined and a simple framework for thinking about the economics of social housing is proposed and then illustrated by two policy examples. The paper concludes that housing planning interventions have to be rooted in a housing system-wide model and evidence base that connects the planning process to both private and social housing, one which is fundamentally about the interdependency between, and flows across, housing tenures.