Housing supply in UK

A fundamental problem in the UK housing market is a persistent shortage of housing. The number of households is forecast to grow by 232,000 a year until 2033, and yet the current rate of home construction is struggling to increase above 150,000-200,000 a year.

According to Crisis, there is a backlog of nearly 5 million households with unsuitable accommodation.

There is currently a backlog of housing need of 4.75 million households across Great Britain (4 million in England). Around 3.66 million households are in housing need and are currently concealed and overcrowded household, those with serious affordability or physical health problems and people living in unsuitable accommodation.

The number of households is predicted to rise by 4.3 million over the next two decades.

27.3 million in 2017. to 31.6 million in 2039. (4.3 million increase)

In 2007 the Government set a target of increasing the supply of housing to 240,000 additional homes per year by 2016. (link) Within this overall target was a commitment to deliver at least 70,000 affordable homes per year by 2010-11, of which 45,000 were to be new social rented homes. However, since the credit crunch of 2008, this target has severely fallen behind as housing construction has slumped.

Policies to deal with expensive house prices in the UK have sometimes focused on demand-side approaches, such as “Help to Buy” which offers credit to groups of young home buyers. But increasing the availability of credit doesn’t directly address this problem.


Source: House building ONS Live table 244

Housing completions have fallen close to 100,000 a year – well below the level needed to meet the growth in the number of households.

Source: GOV.uk – Live tables on new housing

There is hope improved mortgage availability will increase private sector construction. But, it doesn’t resolve other issues, such as planning regulations and local opposition to building homes on a large scale.

New housing

Demand growing faster than supply


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Graph showing that demand for housing stock has been growing faster than net additions to the housing stock, pushing up house prices.

source: Understanding supply constraints in UK housing market, Shelter

Forecasts for future number of households

Despite a lack of housing supply, the number of households in England is projected to grow to 27.5 million in 2033, an increase of 5.8 million (27 per cent) over 2008, or 232,000 households per year. (Household projections 2008-2033 – Data.gov)

Implications of Housing Shortages

1. House prices will continue to rise in long-term


Despite two housing crashes, real house prices show a remorseless upward trend. The limited supply also tends to make house prices more volatile. Because supply is relatively inelastic a small change in demand can cause a significant change in price. This is a major factor behind the UK housing market’s tendency to boom and bust.

2. Housing will become more expensive as the percentage of income

ratio-of-house-price-salary-96-16-ons Source: ONS Housing summary

The ratio of house prices to earnings for first-time buyers is already higher than the mid-1980s – despite the housing correction of 2008/09.

If the long-term trend of rising population combined with limited supply, this is likely to squeeze prices higher. See more at UK housing affordability.

2. Switch to the private rented sector will continue. If house prices continue to rise, more people will be looking for private rented accommodation.

Type of Property


3. Growth in wealth inequality. Rising house prices benefit homeowners (typically older people). However, it reduces living standards of those without a home. The UK will increasingly become divided between those who own a home and those who don’t.

4. Upward pressure on rental prices. The shortage of housing will put upward pressure on the price of rented accommodation. Housing costs will take a bigger share of people’s incomes affecting their discretionary income.

Housing Stock in England


Source: ONS Housing summary

Housing supply in UK



The ONS now publish stats by nation within UK – England, Scotland, Wales.

Local authority housing


Local authority housing stock has plummeted due to the popular right to buy scheme and transfer of housing stock to housing associations.

source: JRF Housing & Neighbourhood studies



4 thoughts on “Housing supply in UK”

  1. Thank you for this – as a new local authority cllr I am trying to ascertain what flexibility there is in the so called ‘standard method’ by which local authorities are required to determine their land supply for housing.
    Here in Herefordshire we are trying to tackle the problem of providing affordable housing to retain or incentivise a younger demographic.


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