Britain’s housing shortage is “entirely self-inflicted”, says IEA
In a new briefing, the think tank said Britain has experienced "nearly two lost decades" of economic growth because it has become too difficult to build housing
Britain’s housing crisis is “entirely self-inflicted”, according to the Institute of Economic Affairs (IEA), which has argued that the UK’s inability to build enough homes is a major cause of the country’s prolonged economic stagnation.
In a new briefing, Buildings: In defence of ‘stupid growth’, the think tank said Britain has experienced “nearly two lost decades” of economic growth because it has become too difficult to build housing, commercial property and infrastructure.
The report, written by Kristian Niemietz, editorial director at the IEA, forms part of the organisation’s forthcoming book, The Great Stagnation: Why Britain Stopped Growing.
The briefing argued that Britain’s economy is constrained by a shortage of physical space, with housing shortages particularly acute in the country’s most productive regions, limiting economic expansion and labour mobility.
According to the report, residential housing is only part of the problem, with shortages also affecting offices, laboratories, retail premises and other commercial buildings, increasing business costs and reducing productivity.
The IEA said housing stock growth has slowed markedly over recent decades.
While Britain’s housing stock grew by between 1% and 2% annually from the mid-19th century to the mid-20th century, annual growth has stabilised at around 0.5% since the 1980s.
The report also argued that Britain is not overcrowded, noting that only around one-tenth of England is developed while almost two-thirds remains farmland.
Kristian Niemietz, economist and author of the briefing, said: “The thesis of this briefing is that Britain has stopped growing, because the British economy is rubbing up against physical capacity constraints.
“We are trying to squeeze a twenty-first-century economy into the physical built-up environment we have inherited from the previous two centuries, and we refuse to expand that capacity to anything like the degree that is required.”
Lord Hannan, director general of the IEA, said: “Every fast-growing economy in history got that way partly by using more of what it already had: more land, more buildings, more space to work and live in.
“Ours stopped, because regulators, with mostly good intentions, built a system that lets NIMBY objectors veto growth while rationing land in a country that’s ninety per cent undeveloped.
“Kristian shows that if we want the growth we were on course for in 1997, we need to think again about who gets to say no to a building.”
Related
Ashling Quinn joins Hampshire Trust Bank as lending director for the Midlands
London Credit cuts development rates and launches new Prime Development offering
Alternative Bridging Corporation provides £1.2m Alternative Overdraft to support London development
Chartway and Hyde begin work on 135-home affordable scheme in Sittingbourne
Glenhawk completes £2.1m finish and exit loan
Paragon Development Finance provides £15.9m for Hampshire later living scheme
Homes England invests £27.7m in Sunderland regeneration scheme
Pivotal reports 121% growth in second charge lending through Believe Loans team
Atom bank reduces Prime and Near Prime rates
Newcastle for Intermediaries relaunches 90% LTV products and expands mortgage offering
Sedulo appoints Tim Akin to London debt advisory team
