House pricing is not as simple as supply and demand; building a million homes throughout the country would be unlikely to significantly influence (on its own) house prices. As well as being a dwelling, housing is an asset and the price of housing is more likely to be affected by changes to finance (eg stamp duty, interest rates, lenders’ risk appetite). Evidence suggests that when interest rates are low and debt is cheap, then prices go up. Building more houses just allows those who are financially leveraged to buy them.
So, to the question: if a million houses were built, prices would be unlikely to tumble (as some may suggest), but we would add more assets to the pockets of the already wealthy who are able to buy them for rental. But that’s the point, isn’t it? Now, if you were to build a million publicly owned houses … Hquartermain
Hot money from Asia and the Middle East would continue to flow in and buy them as an investment. Thus they would rise. Lindisfarn
The focus of property developers is 100% on making properties as expensive as possible so that they can maximise their profits. Without intervention from responsible government (thus ruling out the UK) this will continue, so house prices are not likely to go down, but there may be more choice. Property developers may also try to get more profit from dodgy tax breaks from ministers, but this will not reduce the market prices either. It looks like we are stuffed. Bucharesta
The way to start controlling the obscene property market is to have real rent controls, with levels set to a point that real people can afford. This will drive down the so-called “value” of buy-to-rent properties and also reduce the massive profits from those greedy enough to want to profit from somebody else’s misery. Lower buy-to-rent prices may also mean a sell-off of some of those properties at a price that is also affordable. InAsMuch
Given that housing in the UK is provided by the private sector, developers will wish to optimise their returns. They achieve that by controlling output to ensure that supply never outstrips demand. Therefore, it could be determined that this question is symptomatic of a misunderstood housing crisis. The government and the housing lobby have created a narrative that supply is the problem. Build, build, build is the mantra.
The affordability crisis will not be solved by the government’s policy of leaving the private sector to deliver. Why? Because there is an industry to support the renegotiation of affordable housing commitments and because “affordable” is not actually affordable to those who need it. Housing waiting lists remain stubbornly above 1m while right-to-buy inexorably reduces the stock of social homes.
Last year 243,770 new dwellings were built. Of those, only 10% were “affordable”. The public sector stock decreased by 9,000. Furthermore, affordable in this sense means “discounted”, 20% off market rates, and is not affordable to those in greatest need. True affordability is defined by many, including Shelter, as 35% of household income.
Shelter hit the nail on the head this week with a renewed call for social homes. Not only would this provide housing for those most in need – it would also bring economic and social benefits, including reducing government’s housing benefits bill. The Community Planning Alliance was founded in April to bring together more than 400 campaign groups across the country that signed up to our grassroots map. Rosie Pearson, Community Planning Alliance
In Cornwall, city dwellers buy up new builds, off-plan, without even viewing them, as a bolthole. Local estate agents cannot keep up with them. Then they leave them empty except for possibly a few weeks holiday a year. These people contribute diddly-squat to the local economy. If they move to the country, they rent out their city home. They are the only winners from new builds.
The majority of housebuilding is four-bed detached or semi-detached. It is only out-of-county people who can afford these. Meanwhile, local young people (including working families, NHS and care workers) are living in winter-let caravans and sofa surfing in the summer, or living in vans. Do they really have to move hundreds of miles away from family and friends and give up their jobs just to get a place they can afford to rent?
We just need to build social housing (that cannot be bought and with long-term security) with rents low enough to allow people to save for their own house, or for retirement, rather than clearing them out every month.
Social housing means fewer private renters so rentiers will start selling and prices will start to drop. Build more desirable homes and they will be bought up by those with money to spend, demand will keep driving prices up and nothing will improve. It is the Tory way. Another way of getting public money (via housing benefit) into the hands of their voters. Works a treat! ScienceThink
There’s a huge amount of home-building where I live in Edinburgh, but prices continue to rise ever upwards. As long as property developers are in charge they will make sure prices keep rising. colechops
In Bucks, around Aylesbury, there are seven major housing developments at least, plus every surrounding village has building. Prices still going up … EGriff
I lived in Vancouver for nine years and property prices there had inflated to levels way out of reach of local workers, precisely because everything was being marketed to Chinese investors. Not only that but the properties were being left empty, forcing development further and further from the centre for people who actually needed somewhere to live – with all the negative knock-on effects on transport congestion. They ultimately introduced a foreign-buyer tax and an empty-home tax – both far too late. We would do well to get on and do the same before we allow our cities to be turned into hollow shells. Natalie Godfrey
I seem to remember that there are already enough homes for the UK population, but that the control of the second-home (and “investment” properties, including money launderers) market drives, and keeps ever higher, house prices and rents.
We could solve this, as I believe France does, through appropriate taxation (say 95% on capital gains from second homes, a similar amount on rent, Airbnb and the like … and punitive council taxes on second and empty homes) but that would be democratic socialism. So in the meantime we’ll continue to look after the rentiers at our kids’ expense. TheWhineMerchant
The best way to get house prices down is only to allow one mortgage per person. Like the old days. Second homes should only be bought with cash and not equity. That would rule out 90% of multiple landlords. It’s immoral that houses are bought as investments. Renters who want to buy are treated appallingly in the UK. YorkshireClaret
Looking at historical data … increase a lot!
Since 1978, we have built about 7.5m homes in the UK. In 1978 the average house price was £12,500, now it is £225,000. If you account for inflation, the 1978 house would now cost £73,000. So 7.5m homes lead to a x5.8 increase over the period.
Of course there are many other factors to consider, such as the performance of the economy, population growth etc but several studies by University College London and the London School of Economics show that building new houses doesn’t actually lower prices even in the immediate vicinity of the development. The only people who benefit from the building of these homes would be the developers and land owners, the reason for this is that too many homes that are built cater only for those already on the property ladder (on average, houses are being built that are larger than the existing stock). The housing crisis isn’t a problem of people outgrowing city-centre flats and wanting a bit more space for the family (whom developers generally cater for on greenfield sites), it is properly affordable homes for people starting out.
The only way the government is going to address its levelling- up agenda is by providing more affordable homes, not by making it easier for developers to get permission. What developers build and where they build it is entirely down to which options make them the most money; building truly affordable homes in the so-called red-wall areas won’t make as much money as building toy towns on greenfield sites in the more expensive parts of the UK. Marc Munier
As others have said, I don’t think there’s a straightforward answer because there are so many factors involved. However, there are currently about 27m homes in the UK so this would be an increase of only about 4% to the housing stock. There were about 250,000 new homes built in 2019, so a million is a big increase but not an order of magnitude increase. My best guess is therefore that a million isn’t enough to really have an effect on prices. Double that or more and you might start seeing something (depending on locations, sizes, prices etc). roondoony
If built privately for private ownership/rental, it’s hard not to see that this would add to the current spiral of unaffordable housing – who in their right mind thinks they wouldn’t be bought up by landlords and priced in line with current trends? If built as a public endeavour for sale at affordable prices to people who want to “get on to the housing ladder”, then at best you’re putting off the same problem for a couple of decades. And probably making it worse.
If built as pool housing for long-term rental, ie “council housing”, you’re barely scratching the surface with a million homes – you have to build lots of housing (more than is needed – oversupply is what reduces demand and thus prices), protect them with laws to ensure they can’t be sold off and are serviced adequately within the public sector, as well as pay developers upfront to cover the high costs of building quality stock they will not be able to sell themselves.
Housing is a lot like other infrastructure, such as rail – important enough to be run as a non-profit/loss-leading public enterprise and totally impractical to be trusted to the private sector. Good luck making the case for that. Dorkalicious