Housing economist Paul Cheshire highlights the growing difficulty for young people to enter the property market due to rising construction costs.
Housing economist Paul Cheshire notes that prospective first-time buyers are currently facing a harder path to homeownership than previous generations. While property prices have historically outpaced incomes, a significant lack of housebuilding has contributed to the primary issue. The government previously estimated that England requires 300,000 new dwellings per year to keep pace with population growth, yet only 208,000 were added last year. Inflation and global conflicts, such as the war in Ukraine and the war in Iran, have driven up the costs of raw materials and energy. Additionally, a shortage of skilled labor and strict planning regulations have further increased construction expenses. A home that cost £150,000 to build in 2015 may now cost £230,000, with further increases expected. To address these challenges, the government is introducing plans to streamline planning processes and allow more construction on the green belt. These reforms aim to to incentivize builders and increase the supply of homes to make ownership more accessible for younger people.