Last edited 23 Jun 2017

Housing shortage

Shutterstock 55739488 cropped.jpg

In general, a housing shortage follows the economic principles of supply and demand. When the production of housing outpaces the demand there is a housing surplus. When housing production falls behind demand there is a housing shortage.

According to Shelter, successive UK governments have failed to build houses in adequate numbers, and so there is an ongoing housing crisis. In 2015, Lord Kerslake, the chair of the Commission on Affordable Housing in London said “our inability to build enough homes to meet the country’s needs is one of the biggest public policy failures over 50 years.”

Shelter have suggested that by 2008, the number of new homes starting construction had fallen to its lowest peace-time level since 1924, and is has barely recovered since then. They estimate the number of new homes needed each year is around 250,000. In fact, only 141,000 new homes were built in Britain in 2014.

A lack of housebuilding is the driving reason for the housing shortage, however, other contributory issues include:

The housing shortage has meant that the cost of buying a house has now risen to around seven times the average income (2017), making it increasingly difficult for first-time buyers to save enough for a deposit. Those that do manage to afford a deposit have, in some cases, found themselves with risky mortgage loans and high monthly repayments that they can find hard to meet. In 2013 nearly 29,000 homes were repossessed.

As a direct consequence of the housing shortage, the number of people in private rented accommodation has risen to more than 9 million, and levels of homelessness also on the increase.

In 2015, an investigation by The Guardian found that the UK’s biggest housebuilders are sitting on 600,000 plots of land with planning permission, leading to accusations of land-banking (i.e. deliberately holding land back from development until it has sufficiently increased in value). Housebuilders have disputed the charge, arguing that their business model relies on having a healthy pipeline of plots to develop, and that undeveloped sites are generally owned by owner-occupiers, historic land owners, the government and investment funds.

In 2015, the Redfern Review suggested that high property prices are a result of rising household incomes, high employment and falling interest rates rather than a lack of housing supply, which it argued has been broadly in balance with new household formation over the last 20 years.

Whether this is correct or no, the housing shortage has become a key issue for many people, with all political parties developing policies to address it, with various pledges and commitments to increase the rate of housebuilding, ease the planning process, and enable local authorities to build more themselves.

On 7 February 2017, the government published a housing white paperFixing our broken housing market’, setting out plans to reform the market and boost the supply of new homes in England. Admitting that the current market is ‘broken’, the Communities Secretary Sajid Javid, said: “there is a serious problem … and the cause is simple; we are not building enough new homes.”

However, crucially, the white paper abandoned the government’s manifesto pledge to build 200,000 Starter Homes by 2020 and dropped its plans to require developers to make 20% of all new sites Starter Homes in lieu of other affordable housing.

In response, Labour’s Shadow Housing Minister John Healey called the measures “feeble beyond belief”, saying; "We hoped for better and we needed better ...We were promised a White Paper; we are presented with a white flag."

[edit] Find out more

[edit] Related articles on Designing Buildings Wiki