New report suggests UK housing market will never be able to supply enough homes

Government urged to develop an active long-term strategy to ensure homes for future generations

Alex Johnson
Tuesday 24 July 2012 11:18

The unique structure of the UK housing market means it will never be able to supply enough homes, claims the ‘Understanding supply constraints in the housing market’ report by FTI Consulting for housing charity Shelter. It looks at the housing market and what is constraining the supply of new homes.

It suggests there is  a long-term role for government to promote more competition, encourage new entrants to the market and help house builders to access long-term finance.

The fixed amount of land available in the UK, the planning system required to manage it and the long-lead in times for housing developments are highlighted as acting together to impose constraints and risks on house builders.

“This report found that for decades the supply of housing has fallen short of the level needed to meet demand," said economist Vicky Pryce. "While planning reforms may improve the situation, they could only ever limit rather than remove the costs and constraints on house builders which act to limit housing supply. The report concludes that there are fundamental issues about the nature of the house building industry and the housing market that raise questions about the appropriate role of the state in facilitating an economically and socially optimal level of supply.”

Shelter’s chief executive Campbell Robb said: “Britain’s housing shortage has pushed up house prices to the point where an entire generation is struggling to afford a home of their own. With house building at record lows, all political parties need to tackle this issue head on and set out a long-term strategy that not only boosts supply now but ensures future generations have the homes they need.”

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