Tackling UK housing crisis 'will take generations'

Home ownership in Britain has fallen at a substantial and unprecedented pace over the last 12 years.

Young people find themselves priced out in a way their parents weren't - an unfairness the Government has acknowledged and promised to tackle.

The economics behind the trend look simple enough: the population has been growing, the number of new homes built has been falling, prices have spiked to unaffordable levels.

Today, 36.7% of 25-34 year-olds own their own home, down from 58.6% in 2002. But the Redfern Review, lead by the chief executive of Taylor Wimpey, Pete Redfern, has concluded a lack of new homes is not obviously to blame.

The Redfern investigation has - remarkably, some will argue - found no link between the levels of housing supply and home ownership.

Instead it argues the biggest reason first-time buyers are struggling like never before is financial.

Since the downturn in 2008 banks have restricted mortgage lending and 28-40 year-olds have seen their earnings squeezed, relative to older generations. As a result, they lack buying power.

Given Redfern's day-job, some will inevitably challenge the independence of his review - but the panel he assembled includes Dame Kate Barker, a respected housing economist and a former member of the Bank of England's Monetary Policy Committee.

The Redfern Review judges they supply isn't part of the problem, but Pete Redfern does believe that if affordability is to be addressed then Britain will need to embark on a programme of construction on a scale that we haven't seen since the 1950s and 60s.

The Government is currently targeting 200,000 new homes every year until 2020.

Redfern told me it would require 300,000 new homes a year in England and Wales for the next 25 years for house prices to fall by 20%, back to affordable levels.

Redfern says that in the short term the private sector isn't capable of anything like that level of output without significance funding from Government.

Theresa May has promised to tackle inequality by building more homes - but that ambition will cost money.

However the Government seems to think companies like Taylor Wimpey are part problem.

Last month Sajid Javid accused the big developers of "sitting on land banks" - of buying land and building at a speed that maximises their profits.

The Local Government Association estimates there are a record 475,000 homes which have been given planning permission but have yet to be built.

Redfern dismisses the idea of land-banking as a "myth" and says a proposal to penalise or fine developers who fail to build-out land with planning permission would lead to a fall in new homes in the long-term.

We surely should not be surprised that developers build homes in the most profitable way possible.

What is surprising is that successive governments have believed that, with a few subsidies from the state, the private sector alone would deliver the new homes Britain needs.

The Government is committed to tackling the housing crisis but to do so effectively it may well have to overcome its reluctance to the idea of state provision.

The Chancellor will probably need to directly fund the construction of some of the hundred of thousands of new homes required, or at very least empower councils to borrow to do something similar.

The Autumn Statement is next week.