According to the Barker Review (2003) evidence has revealed that house prices also reflect a lack of supply of housing and a weak responsiveness of supply to house prices. Responding to Housing demand seems uneasy action for most home builders since it takes them a time to complete the works. So as demand rises supply responsiveness can take a significant time lag.
Therefore it is always hard to make quick response to the housing demand. Today the UK government is trying to plan ahead with projected figures to avoid shortages in housing. The government has estimated an increase in the UK population of 5 million in the last 30 years and projected a population of 5.7 million in the next twenty years. This means that more homes will be in demand and therefore more houses will be needed. This increase in population was partly a result of longer life expectancy.
Furthermore, today household numbers are rising mainly due to the different patterns in age, martial status and people desire to live alone than before. This is demonstrated on the graph below. The number of one person households seems to be dramatically increasing and is most likely to continue climbing for the next 18 years.
The dramatic households increase in the recent years has made house-building fail to respond dependently with demand. According to ODPM household has risen by almost 25 per cent in the last thirty years.
The studies of Barker Review have explained that due to the sharp rise in households, government has failed to fulfill the demand. Although house building volume has increased and reached almost 170,000 per year in 2007, it is still shorter than the projected number of dwelling targeted by the government. In a response to the Barker Review, the government has introduced the sustainable communities plan which set out plans to increase housing delivery by an extra 200,000 homes up to 2016.
Housing supply has been a dramatic factor in the UK housing market in the last few years. Currently, however, as the housing market is getting worse and weak it remains difficult for house builder to sustain housing supply.