Four billion pounds of consumer money is being spent on the UK housing shortage, according to a new report from the Confederation of British Industry, part of a broader manifesto it has set as a precursor to the next election.
A figure of £3.2bn in housing related costs and £770m in transport related costs comprises money that consumers “could otherwise save or spend in the wider economy”, the CBI said.
The current state of affairs “is also holding back many young people from getting onto the property ladder or renting a good home.”
The CBI’s business manifesto is designed to call on parties to deliver prosperity for consumers in the next parliament and beyond, ahead of party conference season. According to the industry lobbying group, to satisfy current levels of demand, 240,000 new homes need to be built a year.
It said 200,000 homes have been built in only four of the last fourteen years. In 2010, fewer houses were built than any year since the Second World War, the CBI said.
The gap in demand is pushing up prices, with, on average, a 56 per cent increase in house prices nationally since 2004, and a 90 per cent increase in London.
As a response to some of these factors, the CBI called for:
• development of ten new towns and garden cities by 2025;
• doubling the number of new homes currently built to 240,000 a year; and
• reforming Stamp Duty to end its distortive impact on the housing market.
Other potential areas for action by the next government include:
• giving local authorities more power to release low quality green belt land;
• spending more on capital support for new homes by redressing the balance with housing benefits; and
• introducing fiscal incentives to help older people looking to downsize, or families wanting to extend homes.
Katja Hall, deputy director-general of the CBI, said: “With conference season around the corner, we need all political parties to put forward election pledges which tackle the UK’s challenges head-on so that we deliver prosperity for everyone not just from next May, but for a generation.
“Addressing the chronic housing shortage should be near the top of every party’s to-do list.
“A perfect storm is brewing in the housing market. With demographic changes and demand currently dramatically outstripping supply, now is the time for action. Political parties of all colours have made the right noises on the need for more homes, but without serious action the ambition to own a home will become more and more out of reach to ordinary people.
“We need a stronger response from politicians who must be ready to take bold decisions from building on low quality green belt land to overhauling Stamp Duty.”
