Short of Houses – Limited UK Supply

Britain is Still Short of Houses

For decades after the Second World War, house building steadily produced around 300,000 houses per year. House prices rose and fell with each boom and bust of the economy, but overall gradually rose.

Social housing, in the form of council houses and flats, accounted for around half of the number homes per year being built. One of the first “privatisation” moves by the Thatcher government was the introduction of the Housing Act 1980.

This gave tenants of council houses the right to buy their homes. It gave central government a huge source of revenue, but local councils virtually stopped all social building.

The number of houses being built by the private sector could only amount to around half of the amount needed and prices rose accordingly.

In 2004 the Barker review indicated that the future housing needs of the country would require a supply rate of around 250,000 homes per year to be built, to prevent spiralling house prices and a dearth of affordable homes.

The country’s builders have struggled to maintain half of that amount. In 2006/2007 the industry managed to build some 219,000 homes, but in the aftermath of the financial crash, by 2012/13 the figure slumped to 135,000.

This has led to sky-high prices, and decimated the affordable housing stock. In the wake of the financial meltdown, amongst the government’s austerity measures, the budget for the Department for Communities and Local Government, which in part supports affordable housing, was cut virtually in half for four years.

Since the crash, a series of mergers and acquisitions has resulted in the number of large house builders coming down to just half a dozen.

It is a simple economy to follow, that sizeable housebuilders, having procured large sites, will only develop them piecemeal to keep the prices stable. By the laws of supply and demand putting 2,000 houses straight on to a local market of a 2,500 house development, would give a lower return than building and releasing say, 100 per tranche.

The reluctance to build is at a time when house construction can be achieved at a faster finish rate than ever. Timber frame housing using up-to-date computer assisted manufacturing to make the framework lighter and stronger can be erected in situ within days.

Experiments are being tried with 3d printing in concrete of whole or part house construction methods, a Chinese company recently claiming to have produced 10 houses in 24 hours by 3d printing. The whole face of construction could be about to change.