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Housing gap to hit 750,000 homes by 2025

16/03/2011
Housing gap to hit 750,000 homes by 2025

England faces a shortfall of 750,000 homes by 2025, centre-left think tank the Institute of Public Policy Research has warned.

Assuming the economy bounces back to historic build levels, the gap between supply and demand could be equivalent to the entire housing demand of Birmingham, Liverpool and Newcastle.

Using the government's own projections for household growth and assuming housing supply recovers to the 20-year average of 160,000 new homes a year, England will still have 750,000 fewer homes than it needs.

Researchers estimate that annual build rates would now have to rocket to more than 280,000 homes a year to meet demand. But last year the industry managed to build just 102,830 new homes.

Worst supply and demand mismatches will be in London, the South East, East of England and Yorkshire and Humberside.

In these regions demand is projected to be substantially higher than net additions to the housing stock in recent years.

In fact, the North West of England is the only region where supply could meet demand, with 40,000 extra homes compared to the number of households, due to the high rate of unoccupied premises at present.

Mind the gap

  • London faces a housing gap of 325,000 homes
  • Yorkshire and Humberside faces a housing gap of 151,000 homes
  • East of England faces a housing gap of 132,000 homes
  • South East of England faces a housing gap of 77,000 homes
  • East Midlands faces a housing gap of 66,000 homes
  • West Midlands faces a housing gap of 28,000 homes
  • North East of England faces a housing gap of 16,000 homes
  • South West of England faces a housing gap of 7,000 homes.

The report shows that the social housing sector in particular will be under extreme pressure, no matter how the economy performs in future.

If the economy performs poorly, up to 1.2m households will be priced out of the private sector and will need social housing.

Even under good economic circumstances, an additional 550,000 households will need social housing by 2025.

The report warns that without a new housing policy, this demand will not be met.

There are currently around 4.5m people waiting for social housing -1.8m households, equivalent to 8 % of all English households.

Last year's Spending Review saw the housing budget cut from £8.4bn over the previous three-year period to £4.4bn over the next four years.

Nick Pearce, ippr director said: "We can't go on as we have done. Britain needs to build more homes.

"That's not going to happen without a fundamental review of housing policy. This new analysis shows the serious scale of the problem.

He added: "If the rate of house building doesn't radically increase, we face a growing housing crisis. Whether the economy performs well or poorly, a serious gap looms between housing supply and demand.

"Our ageing population and rising expectations for living standards are going to drive up demand but if there's no change in housing policy it will seriously hold back supply."