House prices have soared (Image: Getty)
The UK has a shortage of 6.5 million homes thanks to record levels of immigration and a failure to build, leading to lower economic growth and even a fall in the birth rate. Average property prices in London have shot up from just ￡25,700 in 1980, the equivalent of ￡89,000 today after inflation, to ￡530,000 today, far out of reach of many buyers.
It means employees are missing out on well-paid jobs in the capital because they can’t afford to move there, a new analysis by the Centre for Policy Studies shows. Researcher Ben Hopkinson said: “Workers are priced out of our most productive cities, and couples are unable to have the families they desire.” Labour has promised to build 1.5 million new homes before the next election.
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The think tank looked at the number of homes in the UK compared to similar European countries, in relation to population size, It found the UK has 446 homes per 1,000 people compared to 560 in France and a European average of 542.
An additional 6.5 million homes would be needed to bring this country up to European levels, which would cut average prices by ￡75,000, the think tank said. Even then, British people would have less living space because UK homes are also smaller than the European average.
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Record levels of migration, with the net number of arrivals reaching 906,000 in the year ending June 2023, contributed to the problem although a failure to build enough properties is also to blame.
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And the problem will only get worse, the inquiry found.
The report said: “The Office for National Statistics predicts that the UK will have long-run net migration of 340,000 people a year. Given this number, eliminating the UK’s housing shortage by 2040 will require building 565,000 homes per year.”
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This would amount to ￡2.8 million over five years, far higher than the Government’s current target. But something similar was achieved in the UK 1920s and 1930s, the think tank pointed out.
Mr Hopkinson, the think tank’s Head of Housing and Infrastructure, said: “These 6.5 million missing homes should be a wake-up call to policymakers from across the political spectrum. Failure to build more homes means British people, especially those in England, are being condemned to smaller, more expensive houses than our European neighbours.
“It is possible to eliminate the shortage, boost wages, increase disposable income, and make the UK a fairer country generationally and regionally, but we need dramatic changes to our policies on planning, housebuilding, and immigration.”
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A Ministry of Housing, Communities and Local Government spokesperson said: "The government inherited an unprecedented housing crisis, but we will get Britain building again through our Plan for Change.
“We are taking decisive action to speed up the planning process and deliver the biggest boost to social and affordable housing in a generation – backed by a ￡39 billion investment.
“This will build the homes this country needs and drive UK housebuilding to its highest level in over 40 years, restoring the dream of homeownership.”