Economy Top Stories
GBO_Andrew Bailey, governor of the Bank of England

Will UK housing crisis lead to economic downfall?

In 2020-2021, the UK hit a low of 1,35,500 homes, much of which was due to the financial crisis

In 2017 the Labour government set a target for 240,000 homes to be built a year by 2022. The UK is nowhere near that. For decades after World War Two the UK used to build more than 300,000 new homes a year. Now it is half of that which is manageable.

The country is facing up to a house-building crisis. A decade ago, the Barker Review of Housing Supply noted that about 250,000 homes needed to be built every year to prevent spiralling house prices and a shortage of affordable homes. That target has been consistently missed – the closest the UK got was in 2016-2017 when 219,000 homes were built.

In 2020-2021, the UK hit a low of 1,35,500 homes, much of which was due to the financial crisis. Last year the figure recovered slightly to 141,000 homes. Labour’s 2021 target has been dropped by the coalition.

In May 2021, Andrew Bailey, governor of the Bank of England (BoE), complained that house-building in the UK was half that of his native Canada, despite the UK having a population twice the size. The consequences have been rocketing prices in London, the South East and some other parts of the country.

About 95% of house-builders surveyed this year thought that the “modest” industry target to build 200,000 new homes a year by 2022 was unachievable. The planning system and local opposition to building were two of the main reasons cited. The Home Builders Federation says that while things have improved recently the planning system is “still far too slow, bureaucratic and expensive”.

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