England could face a housing shortage equivalent to the entire housing stock of Birmingham, Liverpool and Newcastle combined unless there is a “fundamental review of housing policy”, according to a think-tank.
By 2025 there is likely to be a shortfall of 750,000 homes across England, the left-of-centre Institute of Public Policy Research said in a report that uses the Government’s projections for household growth to show how housing demand will increase or decrease in three economic scenarios.
The worst-case scenario, in which the number of households in England grows to 26.3 million, would have housing demand outstrip supply by 1.2 million, although Katie Schmuecker, the author of the report, said that this was unlikely.
The housing shortage increases alongside an improving economy, as life expectancy and net immigration increase. The best-case scenario outlined by the IPPR, which would occur in a less buoyant economy, would still leave England with a shortage of 255,000 homes.
London would be the worst-affected region, with almost half of the 750,000 homes needed in the “most likely” scenario located within the capital. Yorkshire and Humberside would also be seriously affected, with a shortfall of 151,000 homes.
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The only region where supply could meet demand is the North West of England, with 40,000 extra homes potentially available because of the high number of unoccupied premises.
The IPPR assumes that the housebuilding industry does not respond with additional supply and that the net new supply of housing continues to grow by the same number as the average over the past 18 years.
Nick Pearce, director of the IPPR, said: “We can’t go on as we have done. If the rate of housebuilding does not radically increase, we face a growing housing crisis. Whether the economy performs well or poorly, a serious gap looms between housing supply and demand. Our ageing population and rising expectations for living standards are going to drive up demand, but if there’s no change in housing policy it will seriously hold back supply.”
The report does not take into account the falling construction levels of recent years, meaning that the figures could be substantially worse in any one of the three scenarios. Ms Schmuecker conceded that the supply figures used to compile the report were “rough and ready” and that the number of homes needed could rise significantly if fewer homes were built.
Concern has been mounting over the Government’s housing policy, in advance of the Localism Bill, which is at the committee stage in Parliament and which many housing commentators fear may make it difficult for housebuilders to construct new homes in areas where there is resistance from local residents.
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Last week the Royal Institution of Chartered Surveyors (RICS) submitted a report stating that the housing market needed “more information and certainty to be able to deliver the housing required”.
Campbell Robb, the chief executive of the housing charity Shelter, said: “We need clear assessments of housing need, robust local plans and local people given the tools to truly hold their councils to account for the actual building of much-needed homes.
“The Government has committed to building 150,000 homes over the next four years. Even with private sector development, this will come nowhere near to the quarter of a million needed each year to meet new demand.
“With housing investment the biggest loser in the spending review, our affordable housing crisis is unlikely to be solved any time soon.”
On the home front
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102,570 new homes were built last year
13 per cent reduction compared with 2009
87 the number of years since fewer homes were built
232,000 new homes need to be built every year until 2030 to meet demand
Source: UK Government, Home Builders Federation