London Daily

Focus on the big picture.
Thursday, Sep 18, 2025

The insanity of Britain's housing market

The insanity of Britain's housing market

On the day the Office for National Statistics announced a sharp rise in consumer price inflation, albeit to a still modest 1.5 per cent, we discovered that house prices have jumped by a staggering 10.2 per cent in the last year. The average house in England now costs £275,000, close to ten times the average annual income. In 1992, the average house cost three times the average income.
A housing boom during a pandemic in the wake of the deepest recession in 300 years doesn’t make a lot of sense, but a few recent events can partially explain it. After three lockdowns, there is pent-up demand, including for houses. The abrupt shift to working from home has led to a permanent change in how some people do their jobs. Office working and commuting have not returned to pre-Covid levels and may never do so.

Many people have realised that they don’t need to live in big cities and have been chasing down new homes (or second homes) in the countryside. Londoners who became millionaires by virtue of buying a house in the 20th century are cashing in their winnings. Others find themselves with money in the bank to lay down a deposit; the British public has amassed excess savings of £100 billion during the pandemic. Adding fuel to the fire is Rishi Sunak’s stamp duty holiday on the first £500,000 of a purchase price.

All of this is a recipe for house price inflation. Estate agents are reporting a buying splurge of the like they have never seen before. People are purchasing houses without even viewing them. It’s a seller’s market and prices are rising accordingly.

It is not as if there was an absence of inflationary pressures in the housing market before Covid-19 kicked off. Interest rates have been close to zero since 2008, slashing the cost of mortgages (but for how much longer?). With no money to be made from putting savings in the bank or in an ISA, housing has been a safe bet for investors. All that money being printed by the Bank of England has to go somewhere and a lot of it has gone into bricks and mortar.

Above all, demand has been exceeding supply for years. The population of the UK has risen by eight million since 2000, a rise of 15 per cent. The nation’s housing stock has not kept pace, a problem made worse by more people living on their own and buying second homes.

The answer, therefore, is to reduce demand or increase supply. Immigration — which is now the main driver of population growth in Britain — may or may not fall in the years ahead, but it is unlikely to go into reverse (i.e. with more people leaving the country than emigrating to it). This leaves increasing supply as the only option. The Conservative party has a good self-interested reason to get building. People who own their own home are significantly more likely to vote Tory. But many home-owning Conservative voters have self-interested reasons of their own to block planning proposals. Lower house prices do not benefit them personally and they have little reason to want their towns and villages to grow, particularly if they suspect that new homes will not be accompanied by new roads and new schools.

And so, while the government makes encouraging noises about building 300,000 new homes a year, it is constantly thwarted at the local level by Nimbys and tree-huggers.

The idea that Britain does not have enough land for new houses is absurd. Even in England, only 9 per cent of land is built on. The government intends to be planting trees on 75,000 acres of it every year by 2024. If there’s one thing this country has plenty of it, it’s fields. We only need to use a fraction of them to build the homes we need, cut the cost of living and end this crazy bull market.

One answer is to create a series of new towns with road and rail links to the nearest big city. This would at least keep the Nimbys happy. Another answer is to review the Green Belt which has doubled in size since 1979 and is far from being the uninterrupted vista of outstanding natural beauty that its admirers like to imagine.

Whatever the government does, it must do it now and do it quickly. House price inflation of 10 per cent a year should ring the alarm bells. Some people are getting rich out of the boom but it is a highly inequitable form of wealth redistribution that will leave the country poorer in the long run.
Newsletter

Related Articles

0:00
0:00
Close
Macron and his wife to provide 'scientific photographic evidence' that she is a real woman
US Tech Giants Pledge Billions to UK AI Infrastructure Following Starmer's Call
Saudi Arabia cracks down on music ‘lounges’ after conservative backlash
DeepMind and OpenAI Achieve Gold at ‘Coding Olympics’ in AI Milestone
SEC Allows Public Companies to Block Investors from Class-Action Lawsuits
Saudi Arabia Signs ‘Strategic Mutual Defence’ Pact with Pakistan, Marking First Arab State to Gain Indirect Access to Nuclear Strike Capabilities in the Region
Federal Reserve Cuts Rates by Quarter Point and Signals More to Come
Effective and Impressive Generation Z Protest: Images from the Riots in Nepal
European manufacturers against ban on polluting cars: "The industry may collapse"
Sam Altman sells the 'Wedding Estate' in Hawaii for 49 million dollars
Trump: Cancel quarterly company reports and settle for reporting once every six months
Turkish car manufacturer Togg Enters German Market with 5-Star Electric Sedan and SUV to Challenge European EV Brands
US Launches New Pilot Program to Accelerate eVTOL Air Taxi Deployment
Christian Brueckner Released from German Prison after Serving Unrelated Sentence
World’s Longest Direct Flight China Eastern to Launch 29-Hour Shanghai–Buenos Aires Direct Flight via Auckland in December
New OpenAI Study Finds Majority of ChatGPT Use Is Personal, Not Professional
Hong Kong Industry Group Calls for HK$20 Billion Support Fund to Ease Property Market Stress
Joe Biden’s Post-Presidency Speaking Fees Face Weak Demand amid Corporate Reluctance
Charlie Kirk's murder will break the left's hateful cancel tactics
Kash Patel erupts at ‘buffoon’ Sen. Adam Schiff over Russiagate: ‘You are the biggest fraud’
Homeland Security says Emmy speech ‘fanning the flames of hatred’ after Einbinder’s ‘F— ICE’ remark
Charlie Kirk’s Alleged Assassin Tyler Robinson Faces Death Penalty as Charges Formally Announced
Actor, director, environmentalist Robert Redford dies at 89
The conservative right spreads westward: a huge achievement for 'Alternative for Germany' in local elections
JD Vance Says There Is “No Unity” with Those Who Celebrate Charlie Kirk’s Killing, and he is right!
Trump sues the 'New York Times' for an astronomical sum of 15 billion dollars
Florida Hospital Welcomes Its Largest-Ever Baby: Annan, Nearly Fourteen Pounds at Birth
U.S. and Britain Poised to Finalize Over $10 Billion in High-Tech, Nuclear and Defense Deals During Trump State Visit
China Finds Nvidia Violated Antitrust Laws in Mellanox Deal, Deepens Trade Tensions with US
US Air Force Begins Modifications on Qatar-Donated Jet Amid Plans to Use It as Air Force One
Pope Leo Warns of Societal Crisis Over Mega-CEO Pay, Citing Tesla’s Proposed Trillion-Dollar Package
Poland Green-Lights NATO Deployment in Response to Major Russian Drone Incursion
Elon Musk Retakes Lead as World’s Richest After Brief Ellison Surge
U.S. and China Agree on Framework to Shift TikTok to American Ownership
London Daily Podcast: London Massive Pro Democracy Rally, Musk Support, UK Economic Data and Premier League Results Mark Eventful Weekend
This Week in AI: Meta’s Superintelligence Push, xAI’s Ten Billion-Dollar Raise, Genesis AI’s Robotics Ambitions, Microsoft Restructuring, Amazon’s Million-Robot Milestone, and Google’s AlphaGenome Update
Le Pen Tightens the Pressure on Macron as France Edges Toward Political Breakdown
Musk calls for new UK government at huge pro-democracy rally in London, but Britons have been brainwashed to obey instead of fighting for their human rights
Elon Musk responds to post calling for the murder of Erika Kirk, widow of Charlie Kirk: 'Either we fight back or they will kill us'
Czech Republic signs €1.34 billion contract for Leopard 2A8 main battle tanks with delivery from 2028
USA: Office Depot Employees Refused to Print Poster in Memory of Charlie Kirk – and Were Fired
Proposed U.S. Bill Would Allow Civil Suits Against Judges Who Release Repeat Violent Offenders
Penske Media Sues Google Over “AI Overviews,” Claiming It Uses Journalism Without Consent and Destroys Traffic
Indian Student Engineers Propose “Project REBIRTH” to Protect Aircraft from Crashes Using AI, Airbags and Smart Materials
French Debt Downgrade Piles Pressure on Macron’s New Prime Minister
US and UK Near Tech, Nuclear and Whisky Deals Ahead of Trump Trip
One in Three Europeans Now Uses TikTok, According to the Chinese Tech Giant
Could AI Nursing Robots Help Healthcare Staffing Shortages?
NATO Deploys ‘Eastern Sentry’ After Russian Drones Violate Polish Airspace
Anesthesiologist Left Operation Mid-Surgery to Have Sex with Nurse
×