Barker Review of Housing Supply: Securing Our Future Housing Needs
Interim report, scope of review, consultation and commissioned research
Interim Report, 10 December 2003
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In Budget 2003 the Chancellor and Deputy Prime Minister asked Kate Barker, member of the Monetary Policy Committee, to undertake a review of issues affecting housing supply in the UK. Kate Barker’s interim report was published on 10 December, key findings are summarized below.
The number of houses being built in the UK is not keeping pace with demand and damaging the wider economy, according to the interim report of Kate Barker’s independent review of the UK housing market.
In 2001, around 175,000 dwellings were built in the UK – the lowest level since the Second World War. And over the past ten years, the number of new dwellings built has been 12.5% lower than in the previous decade.
Over the last 30 years, UK house prices went up by 2.4% a year in real terms – compared to the European average of 1.1%. In Germany it was 0%, and in France 0.8%.
If UK house prices had risen in line with the European average, since 1975, the UK would have been £8 billion better off. As a result of these price rises first time buyers in 2001 paid on average £32,000 more for their homes.
In 2002, only 37% of new households in England could afford to buy a house, compared to 46% in the late 1980s.
The ratio of lowest quartile house prices to lowest quartile earnings has increased significantly in most English regions. In 1993, a London house cost around four times the annual income of a low income household. By 2002, the same house had risen to almost eight times annual income.
The Review considers a range of factors that might be constraining the supply of housing in the UK arising from industry failures or the policy environment.
The main constraint identified by the Review is land supply. This problem relates in part to the housebuilding industry, in particular, its response to risk which leads to reluctance to build out large sites quickly. The regulatory relationship and control over the use of land also influences the way in which land is made available for development.
The Review will publish a final report with recommendations for Government in Spring 2004.
The scope of the review
The weak responsiveness of new housing supply to rising house prices is a complex problem and the review will therefore consider:
The role of competition, capacity, technology and finance of the house-building industry; and
The interaction of these factors with the planning system and the Government's sustainable development objectives.
The review will identify options for Government action if appropriate, including the use of fiscal instruments.
The review team consulted widely with key stakeholders to establish views and inform analysis.
Barker Review index
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