The FT is annoying me, again, this morning with an article by someone called Neil Hudson that opens with this:
There is a line about the UK property market that you hear so often it barely registers any more. Politicians trot it out on the radio, charities put it in their reports and journalists write it in newspapers all the time. You may even have said it yourself. It is: demand for new homes exceeds supply. It's an obvious truism, apart from one tiny detail: it is completely wrong.
To summarise the rest of the article:
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Developers don't build homes they can't sell.
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They construct new housing only at the pace at which buyers can afford it.
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High mortgage rates and deposit hurdles have crushed affordability, leaving completions stuck around 120,000 homes a year.
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Developers refuse to cut prices.
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Lowering prices resets market benchmarks and damages future valuations.
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Instead, they offer “incentives” — help with deposits or fees — to disguise what are effectively discounts.
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Rising costs make matters worse.
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Inflation in materials and labour, higher borrowing costs, and stricter regulations have squeezed profitability.
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Many developers now prefer to wait out the market rather than build.
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London and the South are especially stuck.
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Only flats make financial sense — but buyers no longer want investor-grade apartments.
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Land prices remain too high for new projects to be viable, creating a self-reinforcing spiral of stagnation.
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Government policy is chasing the wrong end of the problem.
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“Build, baby, build” planning reform assumes construction alone fixes affordability.
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In reality, the issue is the lack of buyers, not builders.
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What could work instead?
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In past downturns, governments bought unsold homes for affordable or rental use — stabilising the market while maintaining capacity.
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A similar strategy could work again, but it would require public investment the Treasury resists.
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What's likely instead?
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Ministers will probably turn to demand-side gimmicks — a new “Help to Buy” or incentives to boost prices — reigniting another bubble rather than fixing affordability.
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In short
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The UK doesn't face a supply shortage of homes; it faces a shortage of affordable demand. Developers won't build what people can't buy — and unless government intervenes directly to reshape the market, we're heading for yet another cycle of false hope, failed targets, and rising inequality.
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(AI was used to assist the production of this summary).
As an exercise in missing the point, this is spectacular, except for one thing. Of course, there is demand for housing:
- Vast numbers of people are living in squalid, unsuitable and decaying properties that need replacing.
- The population is rising, and is going to keep doing so.
- We are not doing enough to meet demand arising for these two reasons.
To pretend this is not the case is absurd.
So, the author is right, affordability is the issue.
And there the problem is in the point I highlight in the second bullet point of paragraph 6: the Treasury will not fund social housing.
The result is a dilemma:
- Vast numbers of people need new houses.
- They cannot afford to ignore them, and there is no hint of systemic change coming in the thinking of almost any party to address this issue.
- The government will not spend to solve the problem.
So housing poverty, need, and desperation all continue. Meanwhile, people wonder why support for Farage grows, even though he has never given any hint that he knows how to solve this problem.
What is the answer? Certainly not a new round of buy-to-let, which only boosts prices and makes housing even more unaffordable.
The answers are likely to revolve around:
- Redirecting savings into housing investment.
- A government housing agency which would work with local authorities.
- Rent controls and secure tenancies.
- A right to ask the government to buy a rental property where eviction is planned, followed by planned rent increases.
- Fixed-rate mortgages for the life of the property, and maybe beyond.
- A government-backed housing bank.
Those ideas are being developed. I will be back on them.
But the summary is simple: the market is not the solution. And, I would suggest, it's really not very hard to work that out. But the FT's author missed the point. The question is, why was that? Could it be that, as a housing market analyst, it might be difficult to get him to understand something when his salary depends on his not doing so?
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Dusting off my PhD in the bleeding obvious
1. There are also major issues about the quality of new build properties, then there is
2. Leasehold and the often abysmal quality of management of leasehold properties by entirely unregulated managers and freeholders
3. The ‘Build Out’ rate which is set to ensure maximum profits for the builders, ie the volume builders will only ever build about 250000 new homes a year and finally
4. The price of land. Now farm land is worth about £10/k acre which as if by magic becomes £100K as soon as Planning Consent is granted. What about Local Authorities being able to buy land at ‘current use value’ for development? Bear in mind all those inter war houses where land represented about 10% of the purchase price and of course building costs have risen roughly in line with inflation
Richard writes – his second bullet point…
“there is no hint of systemic change coming in the thinking of almost any party to address this issue” The issue being the supply of affordable housing to meet the urgent need, including social housing, destroyed by Thatcher, financial deregulation and the Right to Buy.
“Almost any party” except the Green Party (GPEW) that is.
I Googled “What is the Green Party’s housing policy?” which produced this…
The Green Party’s housing policy aims to shift from a private rental market to expanded social housing by effectively “abolishing” private landlords through measures like rent controls, ending no-fault evictions, and increasing taxes on private rentals, Airbnbs, and empty homes. The party proposes a new era of council housing with increased funding for local authorities, while simultaneously implementing a “right to demand” system for tenants to require energy efficiency improvements and new low-carbon heating systems in their homes.
Key proposals
• Phasing out private landlords: The policy aims to reduce the proportion of privately rented homes through a combination of regulation and taxation, rather than immediate abolition.
• Tenant protections: Key measures include:
o Introducing rent controls.
o Ending no-fault evictions and creating new, stable rental tenancies.
o Granting tenants the right to demand energy efficiency improvements and low-carbon heating systems in their homes.
• Increasing social housing: The Green Party plans to significantly increase the stock of social housing through new builds and refurbishments.
o They propose building 150,000 new social homes annually.
o They would abolish the “Right to Buy” scheme.
o Local authorities would be given the power and finance to buy properties for community use and to build new council homes.
• Funding and taxation: Funding for these policies would come from several sources:
o A national insurance tax on private rental income.
o Increased taxes on Airbnbs and empty homes.
o Moving towards a Land Value Tax, where tax is levied on the land’s value and not the buildings on it.
o Ending buy-to-let mortgages and providing government-backed finance for councils and first-time buyers instead.
Noted
The Green party is often criticised for being radical and unrealistic, but much of this was accepted in the early 70s. Pre Thatcher, all parties saw social housing as essential and we had national housing strategies to replace poor quality housing with better quality housing. Okay much of this failed and resulted in high density housing estates not fit for families, but but the intention was there as it was with the new town strategy resulting in the likes of Milton Keynes etc. We had rent controls and long term tenancies, but sadly nothing on energy efficiency.
Now all housing is private and even the new towns and garden villages being built are largely owned occupied with a smattering of so called affordable homes.
A big problem not mentioned is the increasing number of single occupied homes, many post divorce etc. Other than sheltered housing for the elderly very little is aimed at those who want an independent home but maybe not a family sized home with all the expense. I believe America has the concept of condominiums for those wanting their own home but with access to shared facilities. The UK could do with a UK appropriate form of this.
For me this feels like half the job. Ultimately, in my opinion, the aim should be to remove the ability entirely to make significant money by investing in homes. This sounds extreme, but as with a lot of issues at the moment, I think it’s only extreme due to the shift of the window of what’s normal. Remove yourself from that window, and what’s extreme about having homes for people instead of profits.
My idea for the solution to the other half of the problem, which I see as the speculative investment in property and inflated asset prices driven by debt (which compound on eachother in a vicious cycle), is to completely reset the market using house price caps. You’d take a standard house in an area (e.g a 3 bed semi), and set the price cap of that house to a figure, admittedly arbitrary, of 4x the median wage in that area. You then use a House Type Multiplier to set the Price cap for other homes. Regulations then limit any borrowing to buy a house at 4x a salary. Obviously this will crash the housing market, but ultimately that’s the goal. And for all those left in negative equity? I propose a Mortgage Debt Jubilee: a one-time debt write-down for all mortgage holders, resetting mortgage principals to align with these new, affordable price caps, while maintaining their equity. And who knows, maybe that extra money in people’s pockets will finally deliver some growth everyone seems to be so desperate for.
Housing should be a secure human right, but it has become a financial tool for the wealthy.
I have real probelms with removing the right to let a property. What happens when a person relocates for three years knowing they will return? Must they sell? Must they leave the property vacant? Why? The issue is large exploitation.
I wouldn’t necessarily advocate abolishing the ability to let out a property completely, but there must be regulation to limit it’s viability as a “money making” endeavour. Rent caps related to the house price caps I mentioned above would be a starting point.
Perhaps there should be a right to let just one property?
Well, well, we find out this morning that Rachel Reeves is a landlord that breaks rules.
Starmer rules out investigation after Reeves admits rental rules ‘mistake’
https://www.bbc.co.uk/news/articles/cd04d0yxnrvo
No surprise there, then. Same old, same old. No one should be surprised that Blue Labour have no answer to the housing crisis — they are part of the problem.
Even I have to say, this was a very minor mistake. Up there with a parking ticket.
What a load of bollix from the FT. It’s another landlord’s charter.
People don’t like flats at the moment because of panic over cladding caused by the government who ripped up perfectly good building regs and made living in flats more risky. Good job!. Also, the leasehold laws are a joke – it’s a license to print money, sinking funds from charges in private and local authorities meant to deal with long term investment in common areas (roofs, lobbies, stairs, lifts etc., in blocks) are under regulated and audited and get used for other than what they are supposed to be used for.
I’ve just claimed a load of money from Homes England for a scheme that was only there because the housing association sector gave a load of affordable housing grant back to the government because (wait for it) the private loans they had to use to fund the rest of their build became unaffordable because of BoE interest rate rises being used to combat inflation caused by………..Putin.
Homes England (HE) have to move this money off their books – it’s been given to them by the Treasury and they can’t take it back. And the Treasury charges HE for not moving that grant. What sort of system is that? You wouldn’t think that though from the draconian way in which they reluctantly give it to the public sector as the LAST RESORT!
The local authority (LA) I work for is one of a group asking Starmer for £600 million plus injection into their standalone housing revenue accounts (HRA) which are hit by inflation and a new Tory quality regime for social housing. The HRA is funding new stock and renovating its existing. I’ve seen the projections for my LA, and we won’t be able to build in the future – the amount of money to reinvest will decline. Essentially, LAs will run out of money and then no doubt will have to sell their stock off.
Thus HE will go away and crow about how much they are helping affordable housing to be built when in fact it is underfunded local councils and highly, riskily leveraged housing associations doing the heavy lifting to get affordable built. It’s a disgraceful situation.
400 words is not enough to talk about how thoroughly fucked up all of this is.
Thanks
“Meanwhile, people wonder why support for Farage grows, even though he has never given any hint that he knows how to solve this problem.”
Haven’t you heard ? Stopping the boats” will magically solve all our problems at a stroke.
Or so a sizeable section of the Deform vote seems to believe …
🙂
On the subject of homelessness (and bearing in mind our apparent desire to adopt every bad idea to come out of America) I’ve just seen the following :
“The US state of Utah has this week approved a “mega camp” to hold 1,300 homeless people – in isolation, seven miles from the nearest town and with no transport links.
“The camp will consist of locked units and inmates can be subjected to forced labour. Utah is calling this dystopia “work-conditioned housing” – but in reality, as the US National Homelessness Law Center (NHLC) has commented, it is “modern-day internment” for the poor and homeless.”
Full article : https://www.thecanary.co/skwawkbox/2025/10/30/utah-homeless-people/
And so the concentration camps begin…
The British version will be the return of the Poor Law.
I noticed the Canary called it a “Mega Camp” — Surely that should be “MAGA Camp?”
Agreed
This is not too dissimilar to the fate of the US’s prison population. In the United States, the 13th Amendment outlawed chattel slavery but carved out an exception for those convicted of crimes. The 13th Amendment did not abolish slavery – it revised it and shrouded it in secrecy. By including an exception clause allowing slavery “as punishment for a crime”, Congress preserved the legal grounds for forced labour.
In the aftermath of emancipation, Southern lawmakers used the clause to criminalise everyday Black life through Black Codes and funnel newly freed people into profitable “convict leasing” programmes.
The US prison population quickly went from predominantly white to predominantly Black, with labour exploitation at the system’s core. This laid the groundwork for today’s carceral state, a brutal system that now cages over two million people. They remain unprotected from slavery, and Black Americans are incarcerated at five times the rate of white Americans.
Behind the cover of prison walls, people are forced to work in unsafe conditions for little to no pay under the threat of further punishment, including the loss of family visits – a common antebellum punishment for disobedience. Incarcerated people toil on farms, fight wildfires, sew uniforms, clean public buildings, manufacture state furniture and more, all while being denied basic labour rights and protections.
Just as enslaved people were reduced to tools of labour, incarcerated people are treated as disposable assets of the state – valuable only to the extent that they demonstrate compliance and generate returns.
Even when incarcerated people are paid for their labour, they typically earn less than a dollar per hour, rates that amount to a systemic theft of labour value. A recent cost-benefit analysis estimated that between $11.6 billion and $18.8 billion is stolen from incarcerated workers in wages every year. These stolen wages represent not only lost income for incarcerated individuals, but also lost support for their children, families, and communities – further entrenching financial instability, undermining rehabilitation, and perpetuating cycles of poverty and incarceration.
Richard, I’m afraid I think you are un-necessarily hard on Mr Hudson. His analysis fits well with your recent piece on Steve Keen’s thoughts, which you to some extent agreed with in its diagnosis. I can’t see that he is arguing that the market is the solution-quite the opposite. This section:
“What could work instead?
In past downturns, governments bought unsold homes for affordable or rental use — stabilising the market while maintaining capacity.
A similar strategy could work again, but it would require public investment the Treasury resists.”
The problem is, of course that the Treasury would indeed say “Niet”, and what passes for a government at present wouldn’t have the vision or courage to over-rule them- but if that did happen, (and assuming that build-quality were enforced) might it be a quicker and easier way to provide social housing at scale than councils or housing associations building them directly? (I know, not perfect, but the problem is urgent.) Mr Hudson commendably condemns another round of “help to buy” etc, making the problem worse.
I can’t find your answers in what he said.
I’m with Richard on this Adrian.
My LA buys housing in an acquisitions policy – up to 75 existing units a year or less, depending on how many new build units and s.106 units @ 52% OMV the HRA is already purchasing/supporting. These units are paid for from the council’s ring-fenced HRA – NOT from the general fund where your council tax goes (so if there are any ignorant pigs who haven’t cottoned onto that yet, please do so now and forever and shut up).
The problem with acquisitions is that they can be expensive to manage as they are potted about here and there. In the good times past it was more likely these would be sold back into the local housing market. This is why buying a bunch s.106 units or building your own at scale in one place is more desirable. Also, buying activity in a market tends to do what Adrian? That’s right – it tends to increase prices, OK? And under waiting list pressure, we cannot just wait for the market to lower. We buy for need. The HRA reserve shrink faster as costs climb.
Be that as it may, my LA has still nearly 600 unit RTB applications to get through on just over 12,000 units. The schemes we have in the pipeline including s.106 that we can afford come to 300!!; nationwide I think the affordable sector is losing over 20,000 units to RTB because cowardly Labour just did not stop it dead. Where’s that in the FT ‘analysis’?
The FT writer does not get it. All he is doing is talking about the supply side in a market that values housing asset performance over its social use value. This means that no matter how many houses are produced, it’s asset value will tend to keep prices high as the pricing brings forward future income streams and its noses in the trough time again folks for everyone but the buyers and the homeless. That’s what tends to happen with all assets. Houses do not react like widgets to economies of scale. That is a lie.
Richard is right. RTB has to stop. We need to grow the affordable housing stock; curb rents in the private sector – we have to de-asset housing from finance in some way. 400 words – never enough.
Thanks
Lot’s of great points in both the post and the comments, with which I mostly agree. 🙂
But, actually, we do have sufficient homes, it’s just that those who need them can’t afford them. The “spare” homes are absorbed as second homes, rental properties, and unoccupied investment properties.
We need to reduce the price of homes. Lots of good ways to do this as noted in the comments. But this will suck money out of the economy because as the temporary money created by bank mortgages is repaid (and therefore destroyed) it will not be replaced (because smaller mortgages are required for lower priced houses). This will create deflationary pressure in the economy. The ONLY way to avoid this is for the government to spend newly created money to replace the temporary bank money.
This seems to me to be fundamental. You can’t reduce the price of houses, by any means, without either deflating the economy or the government creating new money.
Much to agree with
400 Words On the Housing Crisis is Never Enough Part 3:
It is true that we have a crisis in terms of ‘not enough’ homes but the other crisis is in not looking after what we’ve already got, and that ain’t right good either.
Even a lot of the decent homes works done in the early 2000’s in LA housing stock country wide is over 20 years old today. Currently, as the state has rolled back on investing in current stock AND new stock, we’re seeing social landlords extending the life of components such as kitchens and bathrooms, roofs, windows in order to cope and defer spending money they do not have or will not. So, the stock condition countrywide is going to go down in quality. Period.
The result might well be a fire sale of badly maintained social housing cheaply into the private sector at some time in the future unless the state re-capitalizes it.
On homelessness: It’s not just about people living on the streets. It’s to do with household composition. Household composition at any moment in time tells you future demand. The late great Alan Holmans was the guru about this fact because he was ALWAYS telling previous governments that each household in the UK he was studying at any time potentially had other households in it – the obvious being children who would grow up. So we have households within households. He felt those stats should drive housing supply. He was right. But think on this: kids in the 30’s, 40’s living at home now are essentially homeless too. Households unable to move out will lead to overcrowding – the next elephant in the room.
That is what we have been used to even when Thatcher was in power. Households moving out of households to form new independent households in housing of their own when housing was affordable. Holmans called these I think ‘gross flows’ nationally. That is the natural human life cycle of the family. Remember all this work Richard and Jacqueline have been doing on quantum economics? This is why a housing market based on asset worth is NOT natural, is not sympathetic to the human life cycle because the quantum measured is too small -profit only. And why it fails us now, as with much else.
Your point about ageing stock is key…
Why do people in the Uk think houses last forever without almnost any care?
“it faces a shortage of affordable demand. Developers won’t build what people can’t buy”
With respect to the pure private market, I cannot speak for the UK.
In the USA, *builders cannot build and *developers cannot develop afford housing units without government subsidies in the areas where they are most needed.
*In the USA builders and developers are NOT always the same entity. Some builders only build and some developers only develop.
On a not unrelated topic I have read of a proposed initiative called Right to Sell where, in a nutshell, someone finding themselves in mortgage difficulties could sell their property to the Local Authority and remain in their home as a social tenant.
The importance of stability for a growing family is vastly underestimated and this could certainly be worth exploring.
I like it
I suspect that the hallowed market is not actually the solution to any of our problems – rather that it is the source of the great bulk of them.