There's lots of economics here - not least the macroeconomic implications of a concentrated housing market. However, the crux of this issue is that there are worries that the housing market is increasingly dominated by a small number of large firms and that this might be responsible for a market failure.

Have a think: why might such a situation arise - I'll give you a clue, think about the price/output levels of perfectly competitive and monopolistic markets. And then, have a think about what the counter-argument is likely to be. In fact, the Homebuilders Federation response is pretty close to giving you the answer here.

Here's the Telegraph coverage of the same story - with better graphics. It's worth looking at what has happened to housebuilding in the UK since the end of the 1960s and the extent to which planning permission has been given for housing that is yet to be either completed or even started.

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Dominant building firms are breaking the housing market

Graham Watson

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