UK house prices: Building new properties doesn’t drive down prices, study shows
Building new properties doesn't drive down house prices, according to a study by the London School of Economics.
By looking at the price impacts of a series of Barrat Homes developments in suburbs and villages over the past five years, the researchers found no evidence of a price depreciation.
In fact, in some cases the opposite was true – the report, seen by the FT, says: “Developments of the size and scale studied, even in areas where originally objections were significant, can lead to more rapid rises in local house prices.”
Eight developments were looked at in total, each containing 300 new homes. All were based in the Midlands and South of England.
The results are contrary to the opinion held by many economists that more houses are needed to keep future house prices in check. The consensus is that between 200,000 and 300,000 new homes are needed each year, but in 2013-2014 the UK fell short of this with 141,000.