Shortage of homes over next 20 years threatens deepening housing crisis

19 March 2002

Britain is heading for a property shortage of more than a million homes by 2022 unless the current rate of housebuilding is dramatically increased, according to reports from the Joseph Rowntree Foundation (JRF). The evidence, being presented at the Foundation’s Centenary Housing Conference in London, reveals that the supply of housing is already falling behind demand faster than previously recognised.

As well as launching Land for Housing, the report from a JRF Inquiry, the conference is debating Britain’s housing in 2022, the first in a series of working papers examining the long-term measures needed to tackle social disadvantage. Both warn that the impending housing crisis will hit hardest in London and the South. Although these regions contribute 70 per cent of the rising demand for new homes, only 50 per cent of new homes are currently being built there. By contrast, in the Midlands and the North, there are growing problems of low demand in some areas, and of empty and abandoned property.

The reports highlight the challenges to Ministers, planners, housebuilders and housing associations that arise from the pressing need to tackle housing shortages in the South and to achieve an ‘urban renaissance’ in the Midlands and North. They warn that unless concerted action is taken, areas of high demand for housing will see increased homelessness and a crisis in public services as more nurses, teachers and other staff are priced out of the housing market. The low demand areas of the North will, meanwhile, experience continuing decline and ‘urban exodus’.

Lord Best, Director of the Joseph Rowntree Foundation and author of the working paper, said: “We estimate that the difference between housing demand and supply will have widened into a yawning gap of 1.1 million homes in England alone by 2022: most of it in London and the South East. This genuinely shocking statistic shows why the time has come for policy makers to recognise that a plentiful supply of new and affordable homes is of the greatest importance the nation’s future health and prosperity.”

He added: “The bulk of the new homes could go on recycled ‘brownfield’, but this will only happen if there is positive planning, land assembly and decontamination of polluted sites. Investment in our older areas is vital on environmental as well as social and economic grounds. Even so, we have got to be honest and accept that not all of the necessary housing can be built on recycled land. Even if the Government’s target of building 60 per cent of new homes on ‘brownfield’ land were met, at least 84,000 homes would need to be built each year on undeveloped ‘greenfield’ sites.”

The opening session of the conference is being introduced and chaired by HRH The Duke of Edinburgh. The event commemorates 100 years since Joseph Rowntree acquired land and started building his ‘garden village’ of New Earswick outside York. It also marks a decade since the Duke of Edinburgh’s Inquiry into British Housing published its final report.

The two reports being launched draw on new estimates of the number of extra homes needed in the next 20 years. These are based on population projections published by the Government Actuary’s Department at the end of last year and include revised figures on net inward migration to the UK - which is estimated at 135,000 people (43,000 households) a year, compared with 95,000 (30,000 households) a year previously anticipated.

Demand for extra homes in England is now estimated at around 210,000 properties a year, compared with average output from housebuilders and social housing providers of 154,000 extra homes a year over the past five years. The accumulating gap between demand and output points to a shortfall of 1.1 million homes in 20 years’ time.

Pressure on the South
Although all regions are expected to see growth in the number of households, the reports note that the greatest pressure will continue to be felt in Southern England. Population changes resulting from internal migration from North to South will be relatively small compared with migration out of London placing added demands on housing in the rest of the South East. However, natural growth in the population and the level of international migration into London will mean continuing pressure on the capital’s housing supply.

The reports stress that the effects of housing shortages in the South fall most heavily on the poorest families who cannot afford to buy and have no access to the oversubscribed rented accommodation provided by local authorities and housing associations. Recent figures show a sharp rise since 1996 in the number of homeless households housed by local authorities in temporary accommodation.

The working paper highlights a long-term decline since 1980 in the provision of subsidised, social housing and insists there can be no substitute for greater public investment in achieving a revival. It points out that both the subsidies to housing providers (such as Social Housing Grant to housing associations) and to individuals (such as Housing Benefit and Income Support for mortgage interest payments) have diminished in recent years.

Land supply
The Land Inquiry report identifies an increased need for ‘intermediate’ housing markets in areas where property prices are high, to provide homes for lower and middle-income staff. It argues that schemes could be supported by land pooling arrangements similar to those operating in France and Germany, where landowners have incentives to make land collectively available for housing. Another innovation that could help to protect the value of land and ensure its availability when needed for social housing would be the introduction of Community Land Trusts that are widely used in the United States.

The working paper, in addition, emphasises the scope for institutional investment in the private rented sector to generate new homes at market rents, particularly for single people.

Urban extensions
Both reports urge better use of innovations in housing design that make it possible to build attractively at higher densities. The working paper argues that the most effective way for planners to meet the concentration of housing demand in the South is through extensions to existing towns and cities, rather than new towns.

‘Urban extensions’ can plug into existing public transport routes, schools, shops and facilities - helping to minimise additional congestion and pollution. By building on a significant scale - with several hundred homes - it is also possible to negotiate greater ‘planning gains’ with landowners and developers to fund more affordable housing and community amenities.

Lord Best said: “In our view, housing shortages are set to become one of the most significant social issues of the next 20 years. Unless we act now, shortages will lead to overcrowding and homelessness. But they will also have knock-on effects for the whole of society, driving up house prices in areas of high demand, inhibiting economic growth and making it harder for good quality public services to be delivered.”

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