Lyons Housing Review: Housing a nation
October 20, 2014
The recent publication of the Lyons Housing Review brings home once again the stark reality of the UK’s housing challenge. A look back over historic data on new builds demonstrates just how challenging the Review’s target of at least 200,000 completions a year by 2020 is, with annual housing completions in England currently around 114,000.
Our UK Economic Outlook projects that UK house prices could rise by around 8% this year, with prices increasing by around 13% in London. The decreasing rate of housing completions has caused a shortage of housing, which has been particularly acute in the South East, and has been one of the key drivers of rising house prices.
The Review outlines a series of 39 recommendations, recognising the range of issues that need to be tackled to get Britain house-building again, including bringing forward enough land for new homes, addressing capacity and skills shortages in the construction industry and funding the infrastructure necessary to support housing developments. Commenting on the review, Liz Peace, Chief Executive of the British Property Federation said: “We were told that the Lyons Review would be meaty, and it has certainly proved to be so. The sensible review is extremely comprehensive and pinpoints exactly where problems in the planning system are and comes up with thoughtful solutions. While some proposals, for example those surrounding ‘use it or lose it’, may be difficult to implement, on the whole the review shows a clear understanding of the major problems of the planning system, and how these impact on development in the UK.”
The Review also recognises that different solutions are needed in different places. As well as a shortfall in the overall volume of house-building, in too many cases housing is not being built in the areas with the highest level of demand and growing economies. In our Good Growth for Cities index, cities that do relatively well on jobs, income and skills often pay the price for their success in their relatively low scores on housing affordability.
Councils, working with public sector partners, private developers, the not-for-profit sector and their communities, have an important role to play in setting a strategic direction for housing development for their area as part of their wider growth strategy and collaborating across boundaries where appropriate. The new HRA system is already providing councils with the opportunity to invest in and create new stock, in a way that would have been impossible a decade ago and further powers and funding could be devolved to the local level. The contribution of housing associations is also critical and many are already working to generate new capacity and supply.
While there will be difficulties significantly boosting house building in the short term, with building the right houses, in the right places, critical to sustaining the UK’s economic recovery for 2015 and beyond, it’s a challenge the next government must rise to.