Affordability crisis likely to get worse unless we have recession, says housing economist

The country's housing affordability crisis is likely to get worse unless we experience a recession that suppresses rates of household growth, a leading housing economics expert has said.

Christine Whitehead (left) and Mary Parsons, group director - Placemaking & Regeneration at Places for People at the TCPA's Sir Frederic J Osborn lecture last night
Christine Whitehead (left) and Mary Parsons, group director - Placemaking & Regeneration at Places for People at the TCPA's Sir Frederic J Osborn lecture last night

Professor Christine Whitehead, emeritus professor in housing economics at the London School of Economics, outlined a bleak view of England’s housing situation in a speech last night. 

Speaking at the Town and Country Planning Association’s annual Sir Frederic J Osborn lecture, Whitehead said the latest 2014-based household projections from the Department for Communities and Local Government suggested the number of households would grow by a fifth from 22.1 million in 2011 to 27.7million in 2037.

The figures suggested an annual housing requirement of 222,000 homes, including 55,000 homes in London, she said.

But she pointed out that since 2011, housebuilding is "well below requirements", particularly in London. To "get back on track", the country needs to build in the region of 300,000 homes per year over the next five years, a scenario unlikely to happen.

For younger people, particularly couples, priced out of the housing market, there has been a low long-term rate of household formation. As a result, she said, "housing conditions have been worsening". 

By 2031, she said, almost one in five couples aged between 25 and 29 are expected to be living in someone else’s home, unable to create their own household.

She said: "We are fundamentally planning to make the situation worse."

However, an economic downturn would suppress rates of household formation, which would drive down demand, she said: "The only answer to the affordability crisis seems to be a lengthy recession, which is not what we should be planning for.

"At the moment things can only get worse, unless the economy gets worse."

In the wake of Brexit, Whitehead said lower immigration rates may "take some of the pressure off" housing demand, "but not as much as you think" because current projections already assumed a much lower future annual net migration of about 150,000 people. 

Elsewhere, Whitehead criticised the government for experimenting with too many different policies to address the situation, which she said was "counter-productive and can slow the pace of change".

The National Planning Policy Framework, she said, has not increased the number of planning permissions by as much as expected. She also pointed out that the resulting planning permissions "don’t in itself generate more housing".

Whitehead also criticised councils for being too reliant on large sites in their housing land supply, which are preferred because they are further from residents and less likely to prompt objections.

She said authorities should focus more on medium sites which can be built out more quickly by a wider range of builders.

The housing problem could be addressed, she suggested, though "some sort of emergency programme in London to build large numbers of additional housing on public land".

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