UK house prices: The government could tackle the country's housing deficit - but it has a vested interest in choking supply

 
Russell Quirk
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Help to buy schemes do nothing to solve the issue - supply (Source: Getty)

We need more housing to be built in the UK. That’s a quite indisputable statement that everyone I speak to in the property industry, in the public sector, amongst charities and at the dinner table, agrees with.

The population of Britain increases by around 500,000 people each year largely due to positive net immigration but because people are living longer too, and around 20 per cent of all homes are now occupied by just one person.

The response to this need to put further roofs over our heads has been pretty inadequate. In the peak years of the post Second World War era some 300,000 homes were built annually and in the 1960s the country saw the highest level of housing construction across the private and local authority sectors with over 350,000 properties provided.

But supply then waned until the 1980s, when it saw a brief resurgence above 200,000, dropping thereafter to less than 150,000 per year in more recent times.

Last year concluded with 142,890 properties completed, up by 21 per cent on 2014 but still a lowly number compared to what’s needed.

The reality of Britain’s housing dynamic is that there is one home built for 3.3 people each year whereas the Office For National Statistics states that the average household size is 2.3 people. In other words, 30 per cent of the growth in our population is not being catered for with adequate housing.

There has been much talk over recent years about what the Government should do about what can only be described as a housing crisis, or, as I prefer to term it, the housing deficit.

Housebuilders build houses ,not governments. But our political masters can decide, if they wish, to legislate to combat that. They could use tax incentives or disincentives to encourage building. And considering that only nine per cent of the UK is built on, you’d think that it would be relatively easy to find suitable places to construct new homes.

Our planning laws could be streamlined. Designated Green Belt that holds questionably protected resources such as old trading estates, scrap yards and so on, could be re-defined. And the public sector’s 180,0002 or so property assets that include long forgotten waste-land, pubs, empty houses, fields, industrial units and even an airport, could surely be better utilised.

So why aren’t they?

Most of the political posturing over housing relates to encouraging demand rather than acting upon supply. Various schemes help first-time buyers get on the ladder, and that’s great - but not if that demand depletes availability and, ironically, pushes prices up still further for future first time buyers.

David Cameron, George Osborne, their predecessors and successive housing ministers are not stupid. There are several answers here and I for one have lobbied Government several times with possible solutions that would get Britain building.

But the corridors of power don’t seem to be listening despite loud voices from other property experts and media commentators on this subject.

Why? It’s as if the corridors of power actually want there to be an imbalance between the weight of those needing to buy a home and the number of homes that are available. The consequence being a consistent rise in house prices.

Who could possibly benefit from that, I wonder? Well, every homeowner would see an increase in their equity and would feel good about their net worth having money, at least on paper’ to gleefully spend on cars, TVs, holidays and the like. This would fuel a right-leaning capitalistic attitude favouring the current political incumbents no end, not to mention ticking a rather large ideological box where the encouragement of aspirational home ownership was concerned.

The current Westminster hierarchy is less concerned with those in social housing, who are less inclined to vote their way.

Historically, as supply has reduced house prices have increased. It's no coincidence that GDP has increased as UK house prices have increased. Clearly, having a housing deficit actually has a positive effect on our economy.

Leaving aside the question of morality, you must ask if overheating the housing market through choking supply sustainable? The massive house price corrections as we have seen many times before would suggest not.

But, for those politicians seeking your favour right now, that’s simply someone else’s problem.

City A.M.'s opinion pages are a place for thought-provoking views and debate. These views are not necessarily shared by City A.M.

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