Increasing the supply of land for housing would make little difference to housebuilding rates or house prices, concludes new research commissioned by countryside campaigners, Campaign to Protect Rural England (CPRE) [1].

The study [2] published today (Saturday) shortly before the Government’s Housing Green Paper [3] tracks house prices, housing completions and housing land supply [4] over periods of ten years or more in a range of localities, including growth areas and areas with high and low house prices.  Its recommendations need to be reflected in the future development of Government policy if we are to meet the nation’s housing needs while protecting the environment.

Neil Sinden, CPRE Policy Director said:

‘Evidence uncovered by this study suggests the Government needs to rethink its planning policies for housing.  The relaxation to planning controls which it is currently pursuing will encourage builders to use more greenfield land rather than redevelop more difficult urban sites. This could unleash a new wave of urban sprawl across the countryside and deprive our towns and cities of continued investment in regeneration.’

The results confirm the findings of Kate Barker’s report in 2004 [5] that housebuilding rates have responded only very weakly to rising house prices.  And, critically, the study demonstrates, contrary to Kate Barker’s assumption, that a shortage of building land is not the cause of high house prices.  Most authorities studied had large land supplies (enough for more than ten years’ supply). All had either constant or rising amounts of land available [6]. 

The study found that:

• it is the size, type and quality of homes built that has the greatest influence on local house prices;

• house prices are heavily influenced by the quality of the environment: new homes which improve an area create value, but homes which damage an attractive location can bring down prices [7]; 

• if local house prices fall following development this may reflect damage to local amenity and a decline in the quality of the neighbourhood, rather than a response to a greater supply of new homes;

• even with much higher building rates, the impact on house prices would be very small, delayed and hard to detect.  Any reduction in price resulting from increasing housing supply would be swamped by other factors;

• house prices are controlled not by land supply but primarily by ability to pay; 

• rising house prices reflect, notably, an era of rising incomes, greater wealth available to many buyers as deposits, and mortgage lenders offering much higher loans than was considered prudent only a few years ago;

• affordability as measured by the ratio of house prices to incomes has worsened. However, the proportion of income which first time buyers spend on mortgage repayments remains less than it was for most of the 1980s.  Serious affordability problems are concentrated among those with lower incomes and little wealth.

Neil Sinden concluded:

‘Building the new homes the nation requires should be founded on meeting the needs of households, not on a wild goose chase to reduce house prices.  Simply releasing more land for housing will not solve our housing problems. We need the right kind of homes to be built and planned for including to meet the needs of rural communities. This means a significant increase in the provision of subsidised, affordable housing and redoubling our efforts to use the planning system to make better use of existing developed land.’

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NOTES FOR EDITORS

1.  CPRE, the Campaign to Protect Rural England, is a charity which promotes the beauty, tranquillity and diversity of rural England. We advocate positive solutions for the long-term future of the countryside. Founded in 1926, we have 60,000 supporters and a branch in every county. President: Bill Bryson. Patron: Her Majesty The Queen.

2.  CPRE commissioned independent consultants Green Balance to conduct research into the relationship between planning, housing land supply and housing affordability. As well as analysing broad trends, through case studies a variety of market conditions were explored. Areas chosen were Darlington, Poundbury, Dorchester and West Dorset, Cambridgeshire, Gravesham, Dartford and Torridge. See side panel for links to the report Planning for housing affordability and Recommendations.

3.  The Government is expected to publish its Housing Green Paper, following Gordon Brown’s announcement on 11 July, next week.

4.  Housing land supply is planning permissions waiting to be used plus land allocated for housing in plans but not yet permitted. In all the case study areas studied housing land supply has increased over the period studied. See footnote 6 below.

5.  Kate Barker’s Review of Housing Supply Final report – Recommendations, was published in March 2004.

6.  In the case study areas land commitments were as follows:

7.  A case study of the Poundbury development in West Dorset shows that house prices increased rather than fell when this major high quality scheme came onto the market.