Britain Misses Housing Target By Over A Million Since 2004

Redcar Houses
A row of terraced houses in Redcar, north east England, on June 27, 2016. A leading building society has discovered house completions across the U.K. never reached the country's target, meaning 1.2 million additional homes are still needed to meet demand. Scott Heppell/Getty

The U.K. has missed its house building target by 1,199,180 since 2004, according to recent findings.

Research, from the second largest building society in the country, has been released 70 years after the inception of the New Towns Act, which was announced in Parliament in 1946. The reform was introduced to tackle housing supply shortage following World War Two.

But 70 years on, the U.K. property market is still facing a chronic lack of supply, and questions remain as to how the government proposes to tackle this crisis.

In 2015, the Conservative-led administration set the U.K. house building target by pledging to build one million homes over its five-year term. But 142,890 homes were built in 2015, 29 percent less than the 200,000 homes which would need to be built per year to reach the one million target by 2020.

Yorkshire Building Society analysed government figures showing the number of homes built since 2004 and research led them to the Barker Review of Housing Supply, commissioned in 2003 by the then deputy prime minister, John Prescott, and chancellor, Gordon Brown. The review estimated that 270,000 houses were needed a year in England alone to bring house price inflation under control.

It found the number of housing completions across the U.K. has never reached the 270,000 level—and as a result, 1.2 million additional homes would be needed.

Andrew McPhillips, chief economist at Yorkshire Building Society, said: "The Brexit decision and the uncertainty it creates around the prospects for private sector house builders, not to mention the country's economic outlook, is likely to heighten the housing crisis.

"Addressing the shortage of homes must remain high on the Government's agenda regardless of the work required following the EU vote."

The building society released its findings off the back of its First-Time Buyer Report, which found that young adults in Britain rank buying their own home as their number one life ambition.

During the last decade, the value of Britain's homes has rocketed by £1.412 trillion to £5.752 trillion—more than the combined Gross Domestic Product (GDP) of France, Germany and Italy.

According to Savills' data, more than half of Britain's total growth occurred in London, where the total value of housing stock has doubled, rising by £741 billion. The data took into account prices and the density of homes in order to put a value on Britain's properties.

A further 19 percent of the growth (£270 billion) comes from the South East, where the housing stock is now worth more than £1 trillion after a wave of commuters sold up, cashed in on London house prices and upsized by relocating to the home counties.

In stark contrast, the total value of housing across the North West, North East and Yorkshire and Humber has only risen by £42 billion, contributing to just 3 percent of the value growth of U.K. housing stock over 10 years.

The growth in the total housing in London and the South East has been 12 times that of the Midlands and the North.

The rise in house prices combined with the U.K.'s failure to meet house building targets, means it is even more difficult for people looking to buy.

"We need a clear strategy to deliver the 1.2 million additional homes and options like giving local councils fuller control of existing housing funding, as well as freedom to develop surplus public land, should form a key part of that," McPhillips said.

"The longer we leave the supply crisis to worsen, the more difficult it will be to resolve. The U.K. has failed to build the number of homes needed to meet demand year after year, which has consequently inflated prices and made it even more difficult for those looking to buy."

A Department for Communities and Local Government (DCLG) spokeswoman said: "We've got the country building again—with the numbers of new homes increased by 25 percent in the last year alone.

"The Government has set out the most ambitious vision for housing in a generation, doubling the housing budget to deliver on its ambition to build a million new homes."