Tejvan Pettinger

A feature of the UK housing market is the low quantity of new houses built compared to the long term growth in demand.

Despite high house prices, firms are unable / unwilling to build as many as market forces dictate. The supply of housing is price inelastic.

The lack of supply has meant that the UK has seen a decline in affordability of housing; as a consequence, it is difficult for young people to buy a house and get on the property ladder. Housing is another factor causing increased inequality in the UK.

Reasons to Build more Houses.

Supply is growing less than expected demand. The number of new households is expected to grow by 200,000 – 250,000 a year. Yet, supply has been averaging less than 150,000 in recent years. This leaves a shortfall of housing stock, putting upward pressure on both house prices and cost of rent.

Even at the end of the boom years, house builds were struggling to meet the target of 250,000 a year.

• The number of households in England is projected to rise by 5.8 million from 2008 to 2033, an increase of 232,000 per year on average reaching 27.5 million in 2033. (Communities.gov.uk)

The number of new houses built in the UK in 2010/11 was only 106,000.  This is partly a reflection of the economic outlook, but it also raises long term questions over sustainability of supply.

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Different transport modes have a habit of being replaced. The horse and cart lasted uncontested for quite a few centuries. But, in the eighteenth century, the advent of the canal opened up a whole new mechanism for transporting large quantities of goods. It was the canals that helped Britain’s manufacturing base become a world leader. However, just as the canals were becoming worked to full capacity, along came a new rival, the railroad. The railway made quick long distance travel a reality for many people. Both goods and people could now be easily transported across the country. Now journeys were measured in hours rather than days. The train soon led to the demise of the stagecoaches and the slow canal system. In the nineteenth century, the railway was king and in the UK, we built railway lines to every small town big or small.

Yet, the railways monopoly was soon to be challenged by the internal combustion engine. Cars and buses proved to offer greater flexibility and, at least over shorter distances, greater speed. In the first half of the twentieth century, rails dominance gave way to the car, slowly at first and in the post war period with greater speed. In the 1960s, train-spotting may have been the most popular hobby for young school boys, but adults who could afford it wanted a car. Why be the slave of a train timetable, when you can get to work quicker and faster in the car?

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