Chronic shortage of homes leads experts to recommend building on green belts

Richard Edgar

Former Economics Editor

The edge of green belt land in Cambridgeshire. Credit: ITV News

The relationship between supply and demand is the most basic explanation of how prices move. We're seeing this effect in housing in many parts of the country - prices go up as demand exceeds supply. Other forces are at work, too, but in Britain we have a chronic shortage of homes.

Last year about 109,000 homes were built in Britain - that's fewer than half the number the Barker review estimated we need (between 237,800 and 291,500) to keep house prices stable. This pattern has been repeated for decades meaning we are millions of houses short to meet demand

Paul Cheshire, a professor of economic geography at the London School of Economics, identifies one cause and suggests a controversial solution. Our problems stem from the Town and Country Planning Act 1947, he says. One of the ideas it introduced was greenbelt land, protected areas around some cities, which have had the unintended consequence of driving prices higher as they artificially restricted supply of land.

This greenbelt, Professor Cheshire says, we should build on.

More than half of people polled don't want green belt land to be built upon. Credit: ITV News

Cambridge is an extreme example of what's happening around the country. The booming biotech sector, the university and a major teaching hospital are creating jobs and attracting skilled workers from all over the world yet, the city is full, a person familiar with council research told me.

Read: Public disagree with building new houses on green belt

After squeezing in several thousand new homes on its fringes, there is no more land within the city upon which to build. So the council is asking for permission to sacrifice 18 hectares - of the 1,000 hectares greenbelt around Cambridge - to build 450 houses.

Farmland near Cambridge in the green belt. Credit: ITV News

It's an emotive policy. Residents are trying to block the development not - they say - to protect the value of their homes but rather to preserve the unique atmosphere of a manageable city which has attracted some of the best talent in the world, helping the local (and national) economy grow apace.

More: Poll: 56% don't want housebuilding on green belt land

Professor Cheshire argues this attitude may be inappropriate at a time of racing house prices. Indeed there are several myths he says mean we should ignore the protests

Houses in Cambridge. Much land on the outskirts of the city is intensively farmed. Credit: ITV News

The first is that greenbelts are not slender strips of country Eden. In size, they are one and a half times the area covered by urban development. Also, far from being a rich haven of biodiversity, over a third of the land nationally is intensively farmed crops where a single crop and pesticides "leave the area almost sterile." In Cambridge almost three quarters of the land is farmed in this way. It benefits no one but the farmers, says Prof Cheshire.