To meet demand, an additional 250,000 homes must be built every year for the next 25 years, according to economist Kate Barker’s review of the UK housing market, but are we any closer to meeting that target after ten years? Holly Squire investigates.
In 2004, Gordon Brown and his deputy, John Prescott, commissioned Kate Barker, an economist and member of the monetary policy committee at the time, to conduct a review of the UK housing market.
She was tasked with looking into the causes of a lack of housing supply and the housing market’s inability to respond to increased demand.
Barker concluded that in order to address the country’s housing crisis and demand shortage, the UK needed to build an additional 250,000 homes per year for the next 25 years.
This figure is still held up as the holy grail of housebuilding almost ten years later, but with only 110,000 homes built in the UK each year, the supply-demand gap is widening.
So, how do we reach that 250,000-home-per-year goal? Three sessions at this year’s CIH conference examined the evidence for and against this target, as well as whether it is truly achievable.
According to Neil McDonald, Visiting Fellow at the Cambridge Centre for Housing and Planning Research, the country can build 250,000 homes per year if there is political will and desire to do so, which is currently lacking.
“Obviously, the government does not believe that there will be serious consequences if this target of 250,000 is not met,” he said.
According to McDonald, one of the main factors contributing to the housing shortage is the growing population, with the massive growth in single-person housing driving increased demand across the entire industry. Then there’s the growing number of young adults still living with their parents, which could indicate that our housing shortage is worse than the figures suggest, with many young people delaying or postponing having families because they don’t have enough space, or are lacking in stability because they don’t have a place to call home.
People are effectively putting their lives on hold as a result of the housing shortage, and with housing and the cost of living being the single most significant factor driving young people to leave the country for greener pastures, it’s clear that this is more than just a housing issue, he said, but “demand alone does not build houses.” So, how can we increase supply?
When you consider that the UK has the least densely populated cities in Europe, that only 11% of England is urban, and that we would only need to use 1% of our green and pleasant land to meet the 250,000 home target, space is clearly not an issue. So, what’s the issue?
Help to Buy has gone some way toward making finance more accessible to buyers, boosting housing construction orders by 30% – the highest levels seen since 2008 – but more needs to be done, and while mortgage lending may boost house prices, it does not increase home ownership levels.
Policy Exchange’s Alex Morton believes that the planning system is to blame for rising rents, and that the “very restrictive land use policy” puts developers in a difficult position.
“Planning is a political issue masquerading as a technical issue, and the model needs to be fixed, not just pumped with more money,” he said. We need a more coordinated approach across the board, as well as a complete overhaul of the entire system from start to finish. We currently have a planning-led system that is impeding progress and driving up costs. Supply must increase to keep prices low, but developers require rising prices to build – this means that more must be done to support developers in the long run.”
However, developers will only build if they believe they will be able to sell. And when it comes to the types of homes we should be building, Morton believes that many developers are getting it wrong: “people want traditional style homes – most people hate flats, don’t care about zero carbon, and want parking spaces.”
Then there’s the regional disparity in terms of what’s actually demanded in terms of size and bedroom numbers, with many industry experts believing that local governments should have more control and power over their housing quotas and what’s needed in their areas rather than being bound by developer stipulations. However, as Terrie Alafat of the Department for Communities and Local Government points out, not everyone wants to buy their own home: “There are barriers to demand, and supporting demand also means acknowledging the demand for rented property.” And, while the majority of people want to own their own home, some are content with renting.”
Aside from differences in home ownership opinions, we still need more properties to house people. So, if we want to build 250,000 homes per year, do we have the skills and infrastructure in place to do so?
“Bus pass syndrome is affecting the workforce, people in the industry are getting older and older, and there doesn’t seem to be any young talent at the lower end coming into the sector to fill the gap,” says Chris Blythe of the Chartered Institute of Builders.
Blythe explained how, during times of increased output, the emphasis shifts from education to production, leaving many workers at lower levels with insufficient training, resulting in a fractured industry – as getting workers to site becomes the primary motivator for firms. As a result, infrastructure investment in terms of people suffers. He warns that as the demand for volume rises, so will the quality, adding that “the UK is not ready for a house building surge in the state it is in at the moment.”
So, let’s go back to the beginning: land is a major sticking point that comes before planning issues, housing preferences, and finance. It appears that development land is still in short supply, and with residential land prices outperforming house prices, consented land remains difficult to find, with demand far outstripping supply. So, where else can we construct?
“We should be building houses in our gardens,” said Peter Quinn, business development director at.
The housing market is clearly impacted by a lack of clarity in the planning system, as well as a lack of available land, limited access to finance, and an industry-wide skills shortage. Along with overpriced land, difficult economic and trading conditions, and low consumer confidence. And, while the Government has taken welcome steps to address the low number of houses delivered – with its flagship Help to Buy scheme – there are concerns that, while the scheme is having an immediate impact, it is not helping to create sustainable growth across the industry.
“We cannot address the scale of the housing crisis plot by plot; we need cross-party agreement on what we want to create in terms of future housing,” Town and Country Planning Association chief executive Kate Henderson said. “Times are extremely uncertain, making planning extremely difficult, but it is critical to the future of communities.” We require vision and must consider how to ensure the sector’s growth and renewal.”
If Barker’s vision is to be realised, it is clear that a more integrated approach is required to allow policymakers and developers to collaborate from start to finish to deliver more financially viable and purpose-built homes, and more needs to be done to support house builders.
We can begin to move in the right direction by increasing support and making changes to policy and planning regulations.