11 September 2008

"Rabbit Hutch" Britain

An article in today's Guardian reports that houses built in the UK are the smallest in western Europe. I am not surprised: the high cost of land in the UK results in builders having to develop at high density to keep costs down, and this is also a major contributory factor to the fact that we never seem to be able to build enough houses to satisfy demand. Another contributory factor to the rabbit hutch phenomenon is the frequent requirement on developers to build a certain number of affordable homes in any new development. Affordable generally means small and cheaply made, but as today's report indicates we already have enough small starter homes.

Although I am not generally in favour of allowing market forces to decide everything, in this case we should just let builders build the houses they think are most likely to sell. The majority of people in the UK only own one house, so if builders build more of a certain type of house then prices will come down. People often stay in their first house for a long time (though many of them would like a bigger house), because they cannot find the extra money needed to trade up to a significantly better house. House prices in Britain are far too high: the solution is to build more houses so that supply equals demand, and it does not really matter what sort of house you build. Currently the number of houses being built is going down, but maybe builders would come back into the market if we removed the need to build affordable (that is, low profit) homes, and preferably simplified the frequently long drawn out planning procedures in which everyone from the local council to utility services try and get improvements to their infrastructure from the builder.

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