England ‘particularly bad’ at building houses where they are needed, research shows
England has struggled to build houses where they are actually needed due to restrictive planning rules, new research shows, as the government embarks on a major housebuilding push.
Nationwide the total number of properties grew 21 per cent between 1996 and 2021, according to the Institute for Fiscal Studies (IFS), which is actually slightly faster than the growth of the adult population over the same period.
But this obscures regional disparities, with the rate of housebuilding falling behind population growth in some areas of the country.
In London, for example, the adult population grew by 29 per cent between 1996 and 2021 while the number of new properties grew by only 23 per cent.
The research showed that the housing supply in England is less responsive to changes in demand than in other comparable economies. An increase in demand resulting in a 10 per cent increase in house prices only pushed up housing supply by 1.4 per cent, the research revealed.
This makes the supply of housing in England only half as responsive to changes in demand as parts of France and the US. This responsiveness is also lower than comparable estimates in Germany.
Elaine Drayton, research economist at the IFS said: “England appears particularly bad at building homes where they are needed compared to other countries such as France, Germany and the USA”.
The IFS pointed to restrictive rules on land use as a major reason why housing supply often lagged demand in parts of the country.
“By far the most important source of variation in local housing supply elasticities is lack of available land which it is permissible to build on,” the think tank said.
The new government has announced major changes to the planning system, including a review of green belt land that could free up additional land for development. It has set an ambitious target of building 1.5m new homes over the course of the parliament.
But while it has reinstated mandatory housebuilding targets for local authorities, the method by which these targets have been calculated has changed.
Previous targets were concentrated in urban areas due to the ‘urban uplift’, introduced by the Conservatives in 2021. Under Labour’s new proposals, all local authorities will be required to increase housing supply by 0.8 per cent, with some tweaks made according to affordability issues.
The new method sets a target for the North East which is more than twice its ‘need figure,’ according to Lichfield, and 76 per cent higher for the North West.
The new target for London, meanwhile, has been set at 80,000 a year, lower than the 100,000 pursued by Conservatives before the party watered down the targets in 2022.
“The new housing formula is delivering huge housing uplifts in the parts of the country where (statistically) housing is most affordable and extra housing is least needed,” Robert Colvile, director of the Centre for Policy Studies (CPS) posted on X.