Editor's note: This brief was summarised by The Property AI Newsroom from a report by PropertyWire. Read the original article for full details.

IEA Report: Planning Rules, Not Land Shortage, Behind UK Housing Crisis

A new report from the Institute of Economic Affairs (IEA) states that restrictive planning policy, rather than a lack of available land, is the main cause of Britain’s housing shortage and weak economic growth. The briefing, written by IEA editorial director Kristian Niemietz, argues that the country’s inability to build enough homes, commercial property, and infrastructure has become a significant barrier to economic progress.

The report highlights a marked slowdown in housebuilding over the past 60 years. While the housing stock grew by 1% to 2% annually between the mid-19th and mid-20th centuries, annual growth has since dropped to around 0.5%. This slowdown has contributed to ongoing pressure on house prices.

The IEA briefing also notes that the shortage extends beyond residential property. A lack of commercial premises is said to be increasing business costs, reducing productivity, and limiting expansion in some of the UK’s most economically productive areas.

Challenging the perception that England is overdeveloped, the report points out that only about one-tenth of the country is built on, with almost two-thirds remaining as agricultural land.

For property professionals, the findings suggest that supply constraints are likely to continue supporting property values, especially in high-demand areas where planning resistance is strongest. The analysis comes as 1.5 million UK properties face challenges with mortgage lending due to various structural issues.

The IEA states that successive governments have recognised the problem for more than two decades through policy papers and reviews, but have not implemented reforms capable of significantly increasing development rates.

This briefing is the second in the IEA’s Great Stagnation series, with further reports expected ahead of the publication of the full book later this year.