ABSTRACT

The government has taken the position that the proportion of households in the private sector is too small, that policies should concentrate on increasing the extent of privatisation in housing and particularly on increasing the level of owner-occupation. Those who are currently making the case for greater privatisation in housing argue that its attributes, its methods of production and allocation, and its value to the individual and community make it far more suitable for organisation by the market than has been accepted by policy-makers. The attributes discussed so far suggest that market failure may reduce the level of private utility obtainable from housing, making state intervention to increase consumption desirable. Housing is a merit good if society believes that all members of the community should consume housing of at least a given standard whatever the income or other attributes of the individual. Evidence on the comparative efficiency of production and allocation achieved by the two sectors is thus not straightforward.