England faces 750,000 housing shortfall by 2025

England faces a shortfall of 750,000 homes by 2025, according to a new report from the IPPR.

Its analysis of official government projections show that when the economy bounces back the gap between supply and demand could be equivalent to the entire housing demand of the populations of Birmingham, Liverpool and Newcastle combined.

It says the best case scenario for the economy will require more than 280,000 extra homes each year. But if housing supply continues at the rate of the last twenty years – around 160,000 additions per year – the gap between the number of households and the number of available homes ranges from 255,000 and 1.2 million by 2025.

The worst supply and demand mismatches will be in London, the South East, South West, West and 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.

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.

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 1.2 million households will 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 says that without a new housing policy, this demand will not be met.

Nick Pearce, director of IPPR, says: “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.

“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.”

Our Opinion: Here at Besley Hill we firmly believe that 2011 will be the turning point - and the last year you will be able to buy reasonably priced homes - as the market recovers an acute shortage will be the norm. Talk to any local Besley Hill branch for more on this opinion.

Thanks to Mortgage Strategy 14.03.11