Why the government's 1m new homes target won't make house prices more affordable

 
Emma Haslett
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House prices won't rise unless the government can find a way to deliver new land (Source: Getty)

Even if the UK may be on track to meet a government target of building 1m new homes by 2020, but that still won't be enough to make homes more affordable, new research has found.

A report by Savills has suggested at least 100,000 new homes are needed on top of that target in order to increase the number of people who can afford to buy a house.

In London and the South East, the region bearing the biggest brunt of the shortfall, just 20 per cent of households can afford to buy a new home, the research showed.

Help to Buy has boosted housebuilding

Land grab

The report suggested the only way to make homes more affordable is to increase land supply in areas where demand is highest.

"A commitment to solving the housing crisis is evident in the housing white paper, but to address the crisis where it is most acute will require a regional market-led strategy for land release, including a programme of green belt swaps," it suggested.

Although the government's Help to Buy scheme, designed to help first time buyers, has helped boost the number of homes being built, the research suggested policy "needs to go further".

“Help to Buy may have helped boost housing delivery and given aspiring home owners a welcome leg up onto the market, but something more fundamental needs to be done to ensure we deliver more homes quickly, and at prices that more people can afford, whether to buy or to rent.

“Policymakers need to recognise that high volume delivery of lower priced housing will limit the capacity of developers to fund infrastructure and affordable housing in the way they currently do, via section 106 and CIL payments, so other sources of funding for infrastructure and affordable housing will be essential.”

Help to Buy boost

The report was published as Theresa May pledged a £10bn extension to Help to Buy, which she said will help another 135,000 people buy a home.

The promise, which was trailed on Sunday, pushed shares in housebuilders up earlier this week, with Barratt and Persimmon both rising more than three per cent.

Read more: London house prices have fallen for the first time in eight years

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