Why decades of failed housing policy has held our cities back

With 100,000 stalled sites in London alone, housebuilding needs more help.

After decades of failed housing policy, the UK is now facing a housing crisis. Currently, the UK is building around 100,000 homes fewer than is required to keep pace with demand each year which is one of the reasons we are experiencing high house prices. In fact, since 1959, the UK has seen a real term increase in house prices of 300 per cent; if the price of a dozen eggs had increased as quickly they would cost just under £19 today.

Current government forecasts suggest we need to build 232,000 houses per year but the problem is that the UK has only done this once in the last 30 years. The UK’s housing shortage must be addressed as a priority to unlock valuably needed economic growth and to improve the lives of people across the country. That’s why this year, Centre for Cities has focused on how to put place back into housing policy through our annual health check of UK cities, Cities Outlook 2013, sponsored by the Local Government Association.

One of the main problems is that housing policy is set on a national level, and house building incentives are applied too widely and do not take into account the specific housing needs of each city. Some cities need new homes while other cities have plenty of vacant housing stock but need funds to retrofit or reconfigure existing development. Cities need the freedoms and flexibilities to make decisions about how best to meet the particular needs of their residents.

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Cities such as Cambridge, London and Oxford, for example, are the most unaffordable places to become a homeowner in the country, while also experiencing relatively low vacancy rates. Restricting housing in high performing cities such as these will hurt economic performance as current residents can’t afford to buy, new people can’t come to live and work, and employers are restricted in personnel. In these places, policy should focus on increasing housebuilding.

In cities such as Burnley and Hull, where housing is most affordable but vacancy rates are relatively high, a focus on the supply of housing (except where there is a clear shortage of a certain type of housing) may not help the local economy. In fact it could have the reverse effect – the supply of housing could put a downward pressure on house prices which would hurt current home owners. In these places, policies to deal with vacancy and quality of housing stock are likely to be more beneficial as they can improve the quality of life of local residents, help make areas more attractive to businesses and potentially generate jobs in the form of retrofitting and refurbishment.

Boosting housing supply requires short term and long term policies. In the short run, there is the potential to provide quick boosts to the housing market which would also increase employment and improve economic performance. There are around 400,000 units on stalled sites across England and over 118,000 of these units are found in the ten most unaffordable cities. Initially prioritising these through existing policies, such as Get Britain Building, could provide significant economic benefits in the short term. The construction of 100,000 new houses could support around 150,000 jobs (of which 90,000 are in low skilled positions) as well as providing a boost to the national economy of around 1 per cent.

Top 10 by affordability

  City Affordability ratio (2012) Vacancy rate (% of stock) Stalled sites
1 Oxford 14.7 2.30% 385
2 London 13.6 2.30% 101745
3 Cambridge 11.7 1.00% 2188
4 Brighton 11.1 2.60% 1555
5 Bournemouth 10.9 2.50% 1320
6 Aldershot 10.0 2.70% 1526
7 Crawley 9.5 1.60% 1067
8 Reading 9.3 1.80% 3136
9 Bristol 9.0 2.40% 5346
10 Worthing 8.8 1.80% 314

In the long term, issues such as opening up the house building industry, incentivising developers to use the land they currently have permission to build on and reforming the planning process will be important to increasing overall housing supply. Places should also be empowered to devise their own planning policies including, for example, the use of greenbelt land.

It will take time to reverse the consequences of decades of failed housing policy. However, the correct short term policy focus can bring quick wins for people, cities and the economy, while a focus on greater devolution of power and responsibilities to cities could help resolve the UK's housing crisis over the long term, and deliver sustained benefits to the national economy.

Cities Outlook 2013, the flagship annual publication by the Centre for Cities, sponsored by the LGA is published today. Find out more details.

Photograph: Getty Images

Alexandra Jones is the director of the Centre for Cities

Photo: Getty
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The New Statesman 2016 local and devolved elections liveblog

Results and analysis from elections across the United Kingdom. 

Welcome to the New Statesman's elections liveblog. Results will be coming in from the devolved legislatures in Scotland and Wales, local elections in England, and the mayoral contests in London, Salford, Bristol and Liverpool. Hit refresh for updates!

22:31: Oh god, the BBC's election night music is starting. Getting trauma flashbacks to the general election. 

22:22: A few of you have been in touch about our exit poll. Most of you have been wondering about that one vote for George Galloway but the rest are wondering what happens - under the rules of the London mayoral race (and indeed the contests in Salford, Bristol and Liverpool), 2 votes would not be enough for Sadiq. (He needs 2.5). However, all the other candidates are tied - which makes it through to the second round. What happens then is the second preferences are used as a tie-break. Of the tied candidates, Sian Berry has the most second preferences so she goes through to face Sadiq Khan in the final round. Final round is as follows:

Sadiq Khan: 3

Sian Berry: 2

3 votes is above the quota so he is duly elected. An early omen? 

22:19: Burnham latest. A spokesperson for Andy Burnham says:

"Approaches have been made to Andy Burnham to give consideration to this role. It is early days and no decision as been taken. Whatever the decision, he will continue to serve the leader of the party and stay in the shadow cabinet."

22:17: Anyway, exit poll of the office. We've got:

Sadiq Khan: 2

George Galloway: 1

Caroline Pidgeon: 1

Sian Berry: 1

22:15: Update on Andy Burnham. He has been asked to consider running. More as we get it. 

22:13: People are asking if there's an exit poll tonight. Afraid not (you can't really do an exit poll in elections without national swing). But there is a YouGov poll from Wales and I am conducting an exit poll of the four remaining members of staff in the NS building. 

22:11: It's true! Andy Burnham is considering running for Greater Manchester mayor. Right, that's it, I'm quitting the liveblog. Nothing I say tonight can top that. 

22:09: Rumours that professional Scouser Andy Burnham is considering a bid for Greater Manchester mayor according to Sky News. Not sure if this is a) a typo for Merseyside or b) a rumour or c) honestly I don't know. More as I find out. 

22:06: Conservatives are feeling good about Trafford, one of the few councils they run in the North West.

22:03: Polls have closed. Turnout looks to be low in London. What that means is anyone's guess to be honest. There isn't really a particular benefit to Labour if turnout is high although that is a well-worn myth. In the capital in particular, turnout isn't quite as simple a zero-sum game as all that. Labour are buoyant, but so are the Tories. In Scotland, well, the only questions are whether or not the SNP will win every single first past the post seat or just the overwhelming majority. Both Labour and Tory sources are downplaying their chances of prevailing in the battle for second place at Holyrood, so make of that what you will. And in Wales, Labour look certain to lose seats but remain in power in some kind of coalition deal. 

22:00: Good evening. I'm your host, Stephen Bush, and I'll be with you throughout the night as results come in from throughout the country. The TV screens are on, I've just eaten, and now it's time to get cracking. 

Stephen Bush is special correspondent at the New Statesman. He usually writes about politics.