Report: Understanding Supply Constraints in the Housing Market

By: FTI Consulting
Published: July 2012

Underestimating Supply Constraints in the Housing Market

As considerable attention has been focused on the importance of land and planning issues and the government has made significant changes to the planning system, this work focuses on whether there are other characteristics of the housing market that may also constrain housing supply outside of the planning system.The report includes an assessment of the characteristics of housing supply, the factors determining the supply of housing, and how the market has changed since 2008. It also suggests potential policy responses for boosting housing supply within the current market framework. However, the report concludes that the conditions under which a market leads to an economically efficient level of supply may not be satisfied in the housing maket market and while action to address market failures and limit the unintended consequences of government action may well lead to an improvement in supply, it still may not deliver from the market the level of house building that is required.