How many homes does England really need to build?


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England needs as many as half a million new homes a year to keep up with the country’s rising population, according to a Financial Times analysis — far more than either the Conservatives or Labour have pledged to deliver.

An unexpected boom in the population due to record levels of migration, combined with rising domestic demand and a historic undersupply of homes has left both major parties falling short with their housing targets.

The analysis, which drew on migration projections for 2023-2036, estimated that 421,000 new homes per year would be needed over the period. The number could be as high as 529,000 if current net migration levels hold.

The government’s current target is for 300,000 homes per year, a goal it has failed to reach in recent years. The opposition Labour party has promised to hit the same level on average over the next parliament if it wins power. But housing experts and economists said the targets needed to be more ambitious.

“We need to be aiming higher,” said Paul Cheshire, professor emeritus of economic geography at the London School of Economics.

Levelling up secretary Michael Gove has stuck with the government’s commitment, despite criticism that proposed reforms to boost house building will fail to address shortages.

Labour has in effect matched the target, pledging to build 1.5mn homes over five years if they win the general election expected this year, while acknowledging that delivery would be below 300,000 a year initially. 

The party said the target was “ambitious but achievable” but acknowledged continuing challenges including low historical building supply and limited land availability.

Cheshire said the 300,000 ambition had “stuck in the political narrative” because it was a “handy round number” rather than “a scientific number”.

The FT analysis used the methodology from a 2018 report by Heriot-Watt University, commissioned by the National Housing Federation and homelessness charity Crisis, and updated it with the latest ONS population data and projections on net migration from Oxford university’s Migration Observatory.

The UK’s housing stock has grown at a much slower rate than in peer countries, largely due to greenbelt restrictions and planning bottlenecks that have stalled housebuilding schemes at a time of national shortage.

The UK has fewer homes per adult than most of its European neighbours, like France, Italy and Spain.

Analysts said an unexpected uptick in migration to the UK in recent years had substantially raised the number of houses needed to keep pace with demand. Annual net migration hit a record high of 745,000 in the year to mid 2022, and fell to 672,000 by the middle of 2023, according to the ONS.

According to recent data, average annual net migration to England will be closer to 345,000 over the next 15 years, stemming from higher-than-expected migration levels in 2021 and 2022.

“Just looking at migration, [the housing target] should be somewhere over half a million,” said Karl Williams, research director at the Centre for Policy Studies.

Another key consideration in determining the country’s true housing needs is the backlog of unbuilt homes. England has fallen short of its target in recent years, with delivery peaking at 248,591 in 2019 before falling to 234,400 last year, according to official data.

The 2018 NHF and Crisis report looked at measures of unmet housing need — such as affordability, overcrowding and homelessness. It estimated that an additional 340,000 homes per year would be needed until 2031.

Research published last year by the Centre for Cities think-tank traced the housing backlog to 1947 and estimated 440,000 homes per year would be needed to tackle it while meeting new demand.

However, some experts believe the effects of the backlog on the housing market are overstated. “300,000 is a decent ballpark number to keep supply and demand in balance,” said Andrew Wishart of Capital Economics, a consultancy.

Current estimates could still be an undercount because determining housing need depends on the pace at which people move into their own homes, a process known as household formation.

Glen Bramley, professor of urban studies at Heriot-Watt and the author of the 2018 NHF report, said that when housing is too expensive or scarce you find a “strange circular effect, with children moving back into their parents’ home, or sharing with their peers, and not forming the demand for new houses they otherwise would have”. 

“Some households that should be forming will not form,” he said, and this could bring down expected demand.

The 300,000 target has been a political talking point since it was included in a 2018 housing white paper under Theresa May’s government. The origin of the number goes back to a 2004 independent review which set a 240,000 housing target that has since been revised upward.

“It has become kind of established without anyone knowing precisely where it came from,” said Simon Coop of development consultancy Lichfields. 

A spokesperson for the levelling up department said the “ambition to build 300,000 homes a year remains” and that they had been taking “significant action to drive up building rates”.

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