Britain does not have a housing shortage. We have a problem with the cost not the availability of homes. This can’t be solved by building more houses, because it is not caused by an insufficiency of houses.
I’m no economist. My understanding of the dismal science is rudimentary. I may be shot down in flames as an ignoramus. But here goes. Residential property has become a kind of currency, prized more for value than utility; and its role as a financial asset is messing with its ability to perform the function of actually housing people. Straining to increase the supply of housing will no more restrain price than straining to increase gold production would make much difference to the price of gold. Supply being constrained, and appetite sharpened not by need but by acquisitiveness, even the most strenuous attempts to boost production will not bring prices within the reach of an increasingly large part of the population.
To pursue my argument, I ask you to take an imaginative leap into a Magritte-like dreamworld. Just pretend.
Imagine everyone needed to have an umbrella. Don’t ask why: they just did. To lack this item was universally acknowledged as serious deprivation. To possess it was a fundamental human need. And imagine it was not possible to import umbrellas: they had to be made here; and they were difficult to make, and took ages. Even if we doubled production, the national umbrella stock would only be increasing by about 1.5 per cent per annum.
Imagine that there was no physical shortage of umbrellas — yet curiously this did not dull the demand. Why not? Because we’d grown confident that an umbrella’s value could only rise because the market was assured and supply was restricted: a one-way bet, so in a million individual decisions, we collectively took it.