Explaining Britain's housing crisis with one simple chart

 
Peter Spence
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Want to understand what's driving stunning UK house price growth?

The answer lies with a lack of planning permits, says Sam Bowman, research director at the Adam Smith Institute.

Data released todays shows headline inflation has fallen to an October 2009 low, trundling along at 1.6 per cent in the year to March.

Yet house price growth stood at more than nine per cent in the same period - as values increased by 1.9 per cent in January alone.

Despite a lack of housing supply - Bowman points out that since 2008, the issuance of construction permits has dropped to a 50 year low - investors aren't being allowed to build the new properties they'd like.

So we see the opposite of what we'd normally expect - for the prices of goods like houses to fall, as technology improves. And there's certainly not a lack of innovation in the sector, with builders now able to 3D print new homes in mere hours.

This month the Shanghai WinSun Decoration Design Engineering Co this month managed to produce 10 such concrete buildings in a single day, at a cost of just $4,800 a piece. While they may not be the most glamorous homes, they're symbolic of things to come.

Whether you'll be able to erect one in the UK is a different matter. Here it may not be a case of "can I build?", but instead "will I be allowed to?". A tightly controlled planning process has seen house prices accelerate beyond reach of many, creating permanent renters in many areas.

Our economics reporter Michael Bird points out that if you earned less than £63,000 in the year to February, then the average London house made more than you. This planning system is "the biggest cause of these runaway prices rises", says Bowman, and the solution is to cut it back.

"Unless the government liberalises planning radically to allow a huge amount of new house construction, house prices are likely to stay high for the foreseeable future," he says. As long as permits stay at rock bottom lows, then we can get used to prices that stop new buyers from getting on the property ladder.