Supply and demand

THERE are many reasons why Edinburgh has a shortage of affordable housing. Property prices have escalated in recent years and while growth has slowed, the average house price remains far beyond the means of those on average incomes; there has been an increasing shortage of housing for rent and the right-to-buy policy has left the city council with only the more difficult properties. And thanks to changes in lifestyle, more people are living alone, whether by choice or circumstance.

Yet all of these factors can be boiled down into one simple law of economics: demand is outstripping supply. The question is what can be done to address the problem, not only to help those individuals who are struggling to afford to buy or rent a property in Edinburgh, but to ensure that the city’s economic growth is not undermined by the loss of key workers.

The most obvious solution is to build more houses. Given the restrictions on expanding into the green belt, this is being done on almost every available brownfield site. Huge developments like Waterfront Edinburgh will deliver thousands more homes, and the city council has stipulated that a proportion of them should be "affordable".

Not everyone agrees that this attempt to socially engineer the housing market will work, and any measures to force developers to sell to the "right" sort of people will inevitably lead to unacceptable distortion of normal rules of trade. Measures such as means testing would simply be grossly unfair, especially to those just over the cusp of any limits. But without such intervention then it is obvious that if demand continues to outstrip supply then so too will prices rise and provide an opportunity for speculators to buy up cheap housing and sell it on for profit.

There are two other solutions which the council and the Executive can use to ease pressure on the demand. The first is to invest in transport infrastructure, enabling people to commute more quickly and easily to work in the city. Transport links to the Borders in particular are dreadful, and even the plans to reopen the Waverley line need to be reworked to ensure that the journey time is reduced from the 61 minutes currently proposed.

The city council should also expedite its plans to transfer its remaining housing stock to a not-for-profit association, which would open up the potential for massive investment in rented accommodation - an impossibility under the current public sector borrowing rules. This would go a long way towards not only improving the quality of housing for rent but taking the heat out of the property market.

StreetCars desired

FOLLOWING the result of the road tolls referendum, investment in public transport will be absolutely crucial in attempts to curb the growth of congestion in the city. Edinburgh already has the highest proportion of bus users in the UK, and passengers will doubtless welcome the 10 million investment from Lothian Buses to add 60 new vehicles to its fleet. Some of the buses will replace ageing vehicles, but others will be used to improve services on high-demand routes, which will cheer passengers who find they cannot get on buses at peak periods.

There is a limit to how much impact buses can make on congestion and, as we all know, the council’s strategy includes massive public investment in trams. However, the council and its arms-length company Transport Initiatives Edinburgh are still faced with a shortfall of almost 100m to build tram lines one and two. Given the concerns about poor value for money delivered by such schemes south of the Border, the council would do well to consider the recent suggestion by First that diesel-powered StreetCars could be introduced more cheaply.