Planning policy, planning practice, and housing supply

This paper outlines a brief history of planning policy in England as it relates to housing. It discusses briefly the issues raised by a plan-led system, and the uncertainties of household projections. Evidence on the relationship between house prices and housing supply, and on house-builders' landbanks, suggests that planning constraints are a key factor behind the long-term upward trend in house prices (though over shorter periods other factors, such as long-term real interest rates, will be more important). It concludes that the environmental constraints on additional housing supply, albeit important, can be overstated. While there are serious adverse social consequences of the way in which the English housing market works today, it is not yet clear that the (largely welcome) policy steps taken over the past 3 years will prove sufficient to resolve this problem.