There is nearly unanimous agreement about the cause of the UK’s high house prices, with groups as far apart as the Labour party and the Adam Smith Institute (ASI) agreeing that the problem is a lack of supply.
The number of sites in England where construction on a house began was only 133,650 in the year to March. Despite a jump from the previous year, the figure is a long way below pre-crisis levels. In the six years up to the crisis, over 150,000 English housing starts were registered each year.
But even this figure is a long way from what is needed in the UK as a whole. According to the Future Homes Commission, the UK should be building 300,000 homes a year.
Carney’s own comments on the difference between his native Canada and the UK show how comparably poor the UK’s housebuilding is – last year Canada built far more homes, with a population just over half the size to accommodate.
ASI research director Sam Bowman agreed that the Bank was not in a position to boost housing numbers, but said there were obvious things that the wider government could do, like rolling back planning regulations.
“The green belt is one example of how legislation is pumping up prices by choking supply. Planning permission is so valuable that a piece of agricultural land that receives planning permission for construction will increase in value by 100 times. ”
Figures from NLP Planning also show suggestions to build on brownfield land alone would not meet increasing demand. In every region of the UK, there is less capacity for homes on brownfield land than the projection for the number of new households needing homes in the next 15 years.
Around London, the squeeze is particulary severe. Only 21 per cent of the estimated housing need can be accounted for by brownfield sites.