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

Think Tank: UK Housing Crisis Caused by Decades of Underbuilding

A new report from the Institute of Economic Affairs (IEA) states that Britain’s housing shortage and weak economic growth are the result of decades of underbuilding, rather than a lack of land or demand. The IEA describes the housing crisis as “entirely self-inflicted” and highlights restrictive planning rules as a key barrier to development.

The report, written by IEA editorial director Kristian Niemietz, is part of the think tank’s forthcoming book, The Great Stagnation: Why Britain Stopped Growing. It examines the causes of the UK’s prolonged period of weak economic growth, arguing that the inability to build enough homes, commercial property, and infrastructure has become a major obstacle.

According to the IEA, the shortage extends beyond housing, with a lack of commercial premises increasing business costs, reducing productivity, and limiting expansion in some of the country’s most economically productive areas. The report also challenges the perception that England is overdeveloped, noting that only about one-tenth of the country is built on, while almost two-thirds remains agricultural land.

The IEA highlights a significant slowdown in housebuilding over the past 60 years. Between the mid-19th and mid-20th centuries, housing stock typically grew by between 1% and 2% a year, but annual growth has since fallen to around 0.5%.

The report states that governments have recognised the problem for more than two decades through policy papers and reviews, but have failed to implement reforms capable of significantly increasing development. This briefing is the second in the IEA’s Great Stagnation series, with further reports expected ahead of the full book’s publication later this year.

For letting agents and inventory clerks, the findings underline ongoing challenges in the UK property market, particularly the impact of limited housing supply and restrictive planning on rental availability and business growth.