Why we aren’t building enough houses to meet demand

We aren’t building enough houses, on that everyone seems to agree.

Two quick points to make on that. First, London is different. There, we seem to be in process of building more than enough. I’ve added the numbers up here before, but just to illustrate I have had another press release in this morning from property development group Ballymore.

It’s got three whopping schemes underway. There’s Arrowhead Quay in Canary Wharf; Phase II of London City Island on the Leamouth Peninsula; and Phase II of the “hugely successful” Embassy Gardens in Nine Elms. All in all, the three will create some 3,000 new homes and 250,000 sq ft of commercial, leisure and office space.

Add this lot to the other projects we’ve mentioned in the last year and it is clear, as one reader said to me this morning, that far from being a building desert, London is “seeing its greatest transformation since the Great Fire of London”. Not long now and there should be no supply problem there (assuming everyone wants a two-bedroom flat in a high rise).

So what of the rest of the country? The story we hear most often is one of dismal planning laws and land-banking housebuilders. But as another reader pointed out last week, it isn’t that simple. In fact, councils approve nine out of ten of the applications they receive. But some 400,000 homes in the UK that have been given planning permission have not yet been built. Why?

Ask a developer and he’ll tell you it’s about infrastructure. Getting permission is the easy bit. Negotiating to get a water supply and the like to a new development at a price that doesn’t wipe out your profits is the hard bit. Any reader expertise on this would be very welcome.