For many years it has been clear that not enough new homes are being built each year in the UK.
The Government is concerned that there have not been enough homes built to meet the needs of a growing and ageing population. Its aim is to increase the supply of both new-builds and repurposed empty homes. In 2012 a total of 118,190 new build dwellings were completed in England, which was an increase of 9% on the previous year, but a 31% decrease on the peak of 170,610 in 2008. Only 610,000 new homes have been completed in the last five years, relative to nearly 800,000 in the preceding five, a drop of 23%.
This constraint on new housing supply has seen house prices remain relatively stable over the last three years, despite the difficulty in buyers obtaining financing. 15% of the population is currently in the private rented sector and that figure is expected to double over the next 10 years
The elasticity of housing supply in the UK is low – one of the lowest in Europe – current policy is focused on improving the elasticity of supply so that house building is more responsive to changes in market demand.