Council of Mortgage Lenders: When building more homes isn't enough

Friday 11 September 2015

On Thursday 3 September, Bob Pannell, chief economist of the Council of Mortgage Lenders (CML) released a blog highlighting his thoughts on the current housing market.

The economist feels that the housing market is currently ‘dysfunctional’ and that activity in the market is ‘sluggish’.

Pannell says that the slowing housing market was beset by long-term structural problems that are difficult to address including:

  • There is a growing mismatch between housing demand and supply, which is unlikely to be resolved by a fixation on new-build activity alone.
  • This has been made worse by a secular decline in housing market turnover and liquidity.
  • Poor turnover reinforces inefficient use of the housing stock.
  • Home-ownership is becoming increasingly polarised – by such parameters as age and the tenure of parents.
  • Property prices look set to remain stretched relative to incomes because of the long-term imbalance between supply and demand. Over the last 15 years or so, the widening gap between house prices and earnings has been exacerbated by low inflation and interest rates.