Reform of building restrictions 'urgently needed'

Report warns 223,000 homes needed

Thursday, 07, Jun 2007 12:00

The government must urgently reform the planning laws or a generation of would-be buyers will be priced out of the housing market, a new think-tank has warned.

The National Housing and Planning Advice Unit (NHPAU) reports that demand for housing is continuing to outstrip supply, further pushing house prices out of the reach of many average buyers.

Affordability has declined dramatically since 1998, the report concluded. The housing boom has been exacerbated by insufficient house building programmes combined with a surge in the number of households, fuelled in part by people living alone for longer.

The net result is by 2026, only two in five 30 to 34-year-olds will be able to buy their own home, NHPAU warns. This compares to 57 per cent today, which already compares unfavourably to the late 1990s.

House prices have nearly tripled since 1997 and the trend is set to continue. By 2026, NHPAU predicts the cheapest 25 per cent of houses will cost ten times the average earnings of the poorest 25 per cent of people.

In 1997 low-end house prices were four-times earnings, making a mortgage accessible for low-earners. Today, the cheapest properties are seven times the earnings of the poorest 25 per cent.

The government is planning to build 190,000 homes a year, but the report warns this will be insufficient to meets demand – with 223,000 new households created a year – and will not curb further house price rises.

NHPAU argued urgent reforms of the land planning system are needed to free up more land for house building. This could include some building on greenbelt land.

Housing minister Yvette Cooper said "This powerful analysis shows how vital it is to build more homes. Sticking to regional assemblies' current proposals for 190,000 homes a year simply won't do enough to help the next generation of first-time buyers."

The government has become increasingly frustrated by attempts to block building projects at local levels, passing the blame onto Conservative-controlled local authorities.

But responding to the report, Conservative housing spokesman Michael Gove appeared to back a more extensive home building programme.

He said: "This report underlines the fact that the next generation won't get on the housing ladder unless we build more homes. . . Only a genuinely liberal approach can solve this problem."

Speaking during prime minister's questions yesterday, Tony Blair acknowledged the importance of local decision making, but said the country needed to increase housing supply.