The long-term record of UK housebuilders’ levels of output tells a story of consistent underdelivery. Largely unresponsive to increasing demand, the supply of new homes has been found inadequate a long time before the recent financial crisis, but the crash has made the situation even worse.
The value of land has risen faster than that of almost any other commodity over recent decades, so the development industry has come to prioritise trading land over building homes. The sector has also tended towards consolidation, limiting competition and effectively creating an oligopoly in a marketplace that is vital to the country’s economy as a whole.
The twin focus of reform has been attempting to stimulate new house building by liberalising the planning regime and channelling new direct and indirect subsidies into the major housebuilders. The practical success of the proposed reforms is highly dependent upon the ability and willingness of the UK building sector to translate government subsidy, a more liberal planning system and the availability of more residential land into cheaper and more plentiful housing supply.
This paper sets out a widespread concern that the UK building sector, as it currently stands, may not only be less than willing, but also unable to deliver this side of the bargain.