Towards housing affordability: local supply drivers and optimal policy

This project will investigate how local planning regulations and market power influence housing affordability and supply across the UK.

Why this project is important

The UK faces a housing affordability crisis, with up to 8.5 million people estimated to be unable to access housing that meets their needs and only 9% of local authorities in England and Wales meeting their affordability threshold of five years of earnings. Many factors drive housing prices, including construction costs, interest rates, prevalence of short-term rentals, developer and landlord market power, and insufficient supply. Decisions affecting housing are often taken locally and depend on local conditions like building sites identified in local plans, environmental factors, and the number of developers.

The government’s policy approach focuses on targets, with less detail on how and where to build. The research team aim to shed light on the feasibility of this approach by carefully considering specific local barriers and timelines for different types of projects.

What it will involve

The research will answer the following questions:

1. To what extent do different planning regulations and conditions contribute to the lack of new housing supply and the UK housing affordability crisis?
2. To what extent does market power among developers and landlords contribute to poor housing affordability?
3. Given these key factors, what is the optimal policy design to improve housing affordability across the UK?

The research will involve:

• Constructing a novel dataset of UK planning applications (2000–2024) and linking it with housebuilding, transaction, and search data.
• Use econometric methods to assess the impact of planning decisions, regulations, and market power on housing supply and prices.
• Developing a model integrating supply- and demand-side factors to simulate the effects of scenarios, such as relaxing planning rules, imposing antitrust measures, regulating build-out rates, or introducing rent controls.

How it will make a difference

Findings will be shared with national and local governments, developers, planning practitioners, and policymakers. Outputs will include:

• Policy reports and recommendations distributed to stakeholders and the public.
• A publicly accessible data series and mapping tool to track planning trends and housing demand.
• Workshops and briefings to connect researchers, policymakers, and practitioners.