Thread by @ianmulheirn

My paper for @housingevidence is out today, on why even 300,000 houses per year offers no solution to the #HousingCrisis

Read the summary here @InstituteGC institute.global/insight/renewi…

A thread on supply and prices - more to follow later on home ownership and affordability.

2. Policymakers are in almost unanimous agreement on what's behind the housing crisis: as @mhclg said in 2017 "the cause is very simple: for too long we haven't build enough homes." But this doesn't fit the evidence.

3. Supply has in fact been sufficient to put downward pressure on house prices, but that effect has been outweighed by much larger forces pushing in the opposite direction. Here's why...

4. First on additions to the housing stock. Since house prices hit a low in 1996, we've added 3.7 million houses in England, but just 3.2 million households. As a result the 'surplus' housing stock has almost doubled to over 1.1 million

5. And the surplus is still growing. Last year, early indications are that we added over 240,000 homes. But the ONS anticipates that only about 160,000 households formed

6. What if high rents are choking off households formation? It doesn't look like they are. On the best data we have, private rented sector rents are up about 20% in real terms since 1996, while median household incomes have risen by closer to 50%

7. That *doesn't* mean affordability is fine for everyone. For young and low-income people, slow wage growth, erosion of social housing and housing benefit cuts have hammered affordability - but more market supply won't solve those problems, they need to be tackled directly

8. So if we have enough houses, why are prices so high? The answer is (mostly) the collapse in mortgage rates that has allowed people to borrow ever more money chasing prices upwards (...it's more nuanced than that, so read the report!)

9. Could building 300,000 per year cut prices anyway? Not much. The academic consensus suggests that sustaining that rate for 20 years could reduce prices by roughly 10%. But that's peanuts set against the 160% real terms increase seen since 1996, and no help to this generation

10. So contrary to @Jacob_Rees_Mogg housing supply is not a 'catastrophe'. Raising it well beyond its current healthy rate won't do much to bring down prices, but will create lot more empty homes - more later on why it won't do anything for home ownership either.

11. Read the full report and responses @housingevidence housingevidence.ac.uk/wp-content/upl… 10/10