Britain’s housing crisis just isn’t that complicated – The Property Chronicle
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Britain’s housing crisis just isn’t that complicated Homes cost more than they need to. Why not do something about it?

Residential Investor

How can we end the housing crisis? Would a better planning system ensure more well-designed homes with local support where they are most wanted, over time making homes more affordable than they would otherwise be?

Of course it would. When it comes to whether or not something should be done about Britain’s planning system, that is all you need to know. And yet some seem determined to complicate matters and all but ignore the obvious truth that housing in Britain is more expensive than it needs to be. One such commentator is Ian Mulheirn, who in a recent post for the Resolution Foundation gets awfully worried about whether the supply of housing has been “adequate” or not. It is the latest in a crop of articles by Mulheirn that are widely cited by those who are opposed to more homes being built in the parts of Britain that need them.

Let’s start with a few simple points. Mulheirn’s own firm, for Labour’s Redfern Review, concluded that housing prices and rents would be reduced if we built more homes, all other things being equal. They even estimated by how much.

To repeat: no one is disputing that rents and house prices would be more affordable if more homes were built, than otherwise.

Mulheirn’s contention is that supply did not cause house prices to go up. Well, of course it didn’t. More supply generally causes prices to go down, not up, other things being equal. And Ian would agree that house prices and rents would have been lower than they are now if there had been more supply. His own firm’s study says so.

Academic economists like Professors Paul Cheshire or Christian Hilber of the LSE would have defined the term “shortage” before using it. Cuba has a shortage of cars because of a ban on imports and second-hand car prices in Cuba go up, not down. Permits to drive a New York taxi used to cost a million dollars and it was harder to get a ride, before more supply emerged.

A researcher might break that into two questions.

First, in high-demand places, could we build more homes for less than the current prices (counting all costs, including a return on a builder’s capital)?

Second, could we do that without any significant negative effects on other people?

The answer to both in the South-East is undeniably yes.

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