Worrying new figures show true scale of housing deficit

Alarming figures from Yorkshire Building Society have revealed that, since 2004, the housing deficit in England has grown to 1,199,180.

Related topics:  Property
Warren Lewis
13th July 2016
shadow house
"The longer we leave the supply crisis to worsen, the more difficult it will be to resolve."

In 2015, the government set the UK house building target by pledging to build one million homes over its five year term. However, 142,890 homes were built in 2015 as a whole, 29% less than the 200,000 homes which would need to be built per year to reach the one million target by 2020.

Prior to this, the seminal Barker Review of Housing Supply highlighted that England alone would need to increase its current level of house building by 145,000 in order to reduce annual house price inflation to 1.1%. This figure was based on there being 125,000 completions in 2002-03, meaning that the recommended number of homes needed per year to reduce house price growth to 1.1% was 270,000.

The figures therefore show that the government’s target of building 200,000 homes per year is at least 70,000 properties a year short of what the country needs.

YBS added that as the recommended level of house building has never been reached in the years since the Barker Review was published in 2004, and the recommendations in the Review only relate to England alone, the number of properties needed in the UK each year to reduce house price inflation to 1.1% is now likely to be "significantly higher than the 270,000 figure".

The UK came closest to this figure in the years leading up to the 2007 financial crisis. Between 2004 and 2007, an average of 213,080 homes were built each year. By comparison, the average number of homes built in the eight years since the financial crisis is 30% lower at 148,563 properties.

Andrew McPhillips, Chief Economist at Yorkshire Building Society, said: “Addressing the shortage of homes must remain high on the Government’s agenda regardless of the work required following the EU vote. We need a clear strategy to deliver the 1.2m additional homes and options like giving local councils fuller control of existing housing funding, as well as freedom to develop surplus public land, should form a key part of that.

The longer we leave the supply crisis to worsen, the more difficult it will be to resolve. The UK has failed to build the number of homes needed to meet demand year after year, which has consequently inflated prices and made it even more difficult for those looking to buy. House building has remained stagnant ever since the financial crisis, and this lack of activity illustrates that the current system needs a serious overhaul if the country is to build enough homes.

Lack of housing supply has caused prices to rise well beyond wage-growth, which has increased competition for properties and priced many people out of the market. This issue particularly affects first-time buyers who do not have the ability to offset the rising cost of buying with the increase in the value of their own property. Those who already own a property also face similar obstacles due to the costs involved, as well as being faced with limited choice in the properties available to buy.”

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