The recent White Paper on housing sets out Government’s approach to resolving the current housing crisis. Amongst the measures proposed are amendments to the National Planning Policy Framework in favour of more housing developments; Local Authorities will have to produce plans clarifying the local housing need and identifying areas available for development- including surplus public land and brownfield sites; and encouraging higher density housing.
But is there actually a shortage of housing at all? In his recent article, Ian Mulheirn of Oxford Economics, argues that there are more surplus homes available than ever. In 1991, there were around 3.0% more houses than there were households in the UK, and today the surplus is 5.2% (ONS). Mulheirn suggests that the problem is the cost of housing rather than the availability, with house price increases being driven by unprecedented low interest rates: when interest rates are low, people buy houses to rent out, since the returns from renting are higher than the costs of the mortgage. With a large proportion of new properties being bought as investments rather than homes, pushing up prices beyond the reach of many local people, while doing nothing for home-ownership, surely part of the solution must be prioritising first-time buyers over investors and buy-to-let landlords?