Is increasing the supply of homes really the way to go?

Construction

It is taken for granted both in the industry and in policymaking circles that the UK desperately needs more housing.

The government is so convinced of the case that it increased its housebuilding target from 200,000 homes a year to 300,000 homes a year in last year’s Autumn Budget. Explaining why house prices had spiralled out of the reach of many, chancellor Philip Hammond gave just one reason: “Put simply, successive governments over decades have failed to build enough homes.”

However, writing in last week’s Property Week, Oxford Economics director Ian Mulheirn challenges this view. Pointing to data showing that relative to household income, average rents have fallen since 2005, he maintains that there is no crisis in the supply of housing. Even in London, he says “there is scant evidence of a worsening shortage of places to live”.

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