If there is one conclusion I have become increasingly convinced of over the years, it is that the housing debate has largely lost sight of supply. That may sound like an old-fashioned argument, particularly because housing has become such a politically and emotionally charged subject, but I still struggle to think of another sector where we believe that producing more of something makes it less affordable.
If we build more washing machines, we expect washing machines to become cheaper. If we manufacture more solar panels, prices tend to fall. Greater supply generally creates more competition, more choice and lower costs over time. Housing is often discussed as though it somehow operates outside these basic economic relationships, with a prevailing view that building more homes simply creates more profit for developers while doing little to improve affordability.
I have never found that argument particularly convincing. The problem is not that housing behaves differently from every other market. The problem is that we have gradually rationed the system to death. Once scarcity becomes the defining characteristic of the market, every additional home becomes politically contested and every new development becomes a debate about who benefits and who loses. The system becomes increasingly focused on distributing a shrinking supply rather than increasing it.
Part of the difficulty is that housing discussions often focus almost exclusively on new homes, when the overwhelming majority of housing already exists. Around 98 per cent of the housing stock is existing housing, which means that movement through the system matters enormously. New homes do not simply house the people who move into them. They create chains of movement that release homes elsewhere, improve choice and allow people to move through different stages of life.
This is one reason I have become increasingly interested in different forms of housing and different tenures. If more purpose-built student accommodation is delivered, fewer students occupy traditional family housing. If more senior living accommodation is built, older households may have realistic options to move from larger homes that no longer suit their needs. If co-living schemes emerge in the right places, younger renters may become less reliant on subdivided family housing. Build-to-rent, build-to-sell, student housing, senior living and co-living all perform different functions, but they contribute to the same objective of improving the movement of housing through the wider system.
The planning system has often struggled to accommodate this variety. There remains a tendency to assume that the principal purpose of development is to build homes for sale, and while that remains an important part of the market, relying almost exclusively on build-to-sell creates its own limitations. Sales rates slow, absorption becomes constrained and development pipelines become increasingly dependent upon relatively narrow market conditions.
One of the things I have become more convinced about in recent years is that places work better when multiple forms of housing are allowed to exist alongside one another. A neighbourhood that contains homes for sale, homes for rent, student accommodation, senior living and other forms of housing is often more resilient because it is not dependent on one source of demand or one business model. If one tenure slows, another may continue to perform.
Housing markets do not simply operate through individual transactions. They operate through movement. New homes are rarely just new homes. They form part of a much larger chain that influences millions of existing homes and the choices available to the people who live in them.
My own view is that we have become increasingly uncomfortable with allowing housing markets to function in this way. We have become more interested in managing scarcity than encouraging abundance. We have narrowed the range of providers, constrained the types of housing that are considered acceptable and become increasingly suspicious of development itself. The result is that we often expect housing to become more affordable while simultaneously restricting the very supply that would help to achieve it.
Read the series
Part 1: We Talk About Housing, But Rarely About Viability
Part 2: We Have Rationed The System To Death
Part 3: The Conflation Of Terrible Things
Part 4: Why Smaller Builders Matter
Part 5: Building A Better System
