The chief economist of the Council of Mortgage Lenders has said that better use of current stock is key to addressing the country’s housing supply crisis.

In a Council of Mortgage Lenders (CML) News and Views article, Bob Pannell said it was clear that the country needed more new homes.

However, he added that for the crisis to be averted a number of factors which were preventing best use of existing stock also had to be addressed.

Pannell argued that even if government policy helped to deliver the 300,000 new homes in the UK over the next decade, 90% or more of the housing stock that will exist by 2025 had already been built, and was being lived in by somebody.

Pannell said it was clear that demand was being increased by migration, increasing life expectancy and the growth in the number of single-person households, but listed a number of factors which he believed the Government needed to address to help solve the crisis. These included:

• An ageing population that holds a disproportionately large amount of housing assets, which is under-occupying housing and is reluctant or unable to move.
• Demand for rental properties is increasing because property prices were continuing to outstrip earnings, and first-time buyers had no housing equity growth to draw upon – unless it was from their parent.
• Although landlords were helping to improve the level of rental property, they tend to expand their portfolios, and therefore do not release much property back on to the market.

Pannell also said promoting more activity within the current stock would help. He said: “Helpfully, government policy often focuses on encouraging new housing construction, and this is essential (although not sufficient) in helping deliver a long-term solution.

“But we should not forget that the vast majority of housing supply in any period comes from those selling existing stock. Promoting more activity across the market as a whole may help to encourage both more efficient use of existing housing and the marketability of new homes.

“In particular, the government should not forget that taxation plays an important role in influencing liquidity in the property market and the efficient use of housing.

“Recent reforms may have improved the structure of stamp duty by removing some of its price distorting effects, but it is difficult to disagree with the Institute for Fiscal Studies that these reforms have transformed stamp duty from a “very bad” tax into merely a “bad” one.”

He said: “It’s tempting to say that we are still recovering from the effects of the credit crunch. And while that’s true, a range of deep-seated and inter-related problems in the housing market is holding back a recovery in transactions.

“They present fundamental and long-term challenges, and will not easily be solved.

“As a result of these factors, we now have a dysfunctional housing market, beset by long-term structural problems that are difficult to address.”