Research looks at whether the housing market is broken

A new research report by real estate advisor CBRE entitled “Twenty years on from the Barker Review: Is the housing market still broken?” shows that the UK has failed to deliver between 1.5 and 2.5 million homes, relative to the targets recommended in the initial analysis.

The Barker Review of Housing Supply, published in March 2004, recommended increasing the delivery of new homes in England by between 70,000 and 120,000 each year to help lower the rate of house price growth and mitigate issues of market volatility, reduced affordability and macroeconomic instability.

The CBRE’s research also found that while average annual house price growth has lowered, affordability has worsened.

The average house price-to-earnings ratio across England has increased from 5.12 in 2002, to 8.28 in 2022, according to the Office for National Statistics – prompting a fall in the number of owneroccupiers.

Since 2003, the UK’s average house price has grown from £139,000 to £302,000. The average mortgage payment has increased from £637 per calendar month to £1,327, with mortgage rates as a percentage of income rising from 35 per cent to 44 per cent. In addition, the average deposit required has increased from £45,800 to £107,800.

Jennet Siebrits, Head of UK Research at CBRE, said: “The reality is, in the 20 years since Kate Barker’s report, a perfect storm has materialised whereby delivery and affordability of housing has worsened considerably. The UK has failed to meet housing targets, earnings have failed to keep up with house price growth, and mortgage loan-to-value ratios are more stringent.”

The CBRE analysis looks at recommendations from Kate

Barker’s report centred around making it easier and faster to gain planning permission to boost development activity. However, it found planning decision speed has continuously slowed in the last decade.

Overall, almost 60 per cent of major planning applications were decided within 13 weeks in 2012, but this had fallen to just 20 per cent in 2023.

The CBRE also looked at possible rent controls and warns the short-term benefits would likely not outweigh the long-term cost of supply shortages and poorquality stock.

Scott Cabot, Head of UK Residential Research, said: “Rent controls would risk reversing the positive increase in supply of the private rented sector over recent years, and halt the development of the build-to-rent sector, which has now delivered 267,000 homes in the UK. “Imposing rent controls on a market with a severe lack of supply would exacerbate the problem by deterring private landlords, as we’ve seen in European and other international markets.”

He adds that after a five-year rent freeze in 2020 in Berlin, there was a 35 per cent drop in rental supply within a year.

The report also says caution should be taken in introducing measures on short-term and holiday lets, to avoid a detrimental effect on UK tourism. However, CBRE says greater returns and lower fees from holiday lettings are persuading landlords to move away from traditional private renting.

Ms Siebrits says: “The number of short-term lets in the UK is equivalent to an area the size of Dorset and is taking housing stock out of the mainstream rental market.”

She adds that a uniform approach to legislation would capture change of use stock and show how short-term lets are impacting housing supply.”