We are doing a paper called “The case for house building”, which may not be to your taste; it will argue that, unfortunately, supply is an unavoidable part of any solution. It is frustrating that many other factors, such as interest rates, immigration and stamp duty, are contributing to the housing crisis, but the unavoidable reality is that supply affects price—there is no market in which supply does not have an impact on price. Throughout most of human history, the average cost of a house has been close to the build cost. If you really want to be technical, it is the capitalised future stream of rental income—house prices sometimes get out of line because there are asset price bubbles—but if you work out the rental stream of the average property over 30 years, it should be close to the build cost. Anything above that is fundamentally caused by an imbalance between supply and demand.
Ian Mulheirn has very eloquently made the case that we should not focus only on supply. I totally agree, but I think there is sometimes a desire to wish away the problem. Having said that, I empathise quite a lot with politicians, because it is annoying that other issues are contributing. I would argue that immigration is probably the quickest and shortest lever you could pull; I am thinking of the Chesham and Amersham by-election, for example, in which a party that strongly supports more immigration and more refugees was somehow arguing that there could be no building in any kind of southern constituency.
However, that does not get us away from the fact that for a long time we have not built enough houses for the people who are already here. We can see that in levels of homelessness and overcrowding, particularly for people at the bottom of the market who are really suffering and cannot have families. It is just unconscionable not to do something about that. So yes, cut stamp duty; yes, reduce immigration; but unfortunately there is just a big backlog. We will have a report out soon on this.