Reacting to EY Item Club's new report on London's housing bubble, Ben Southwood, the ASI's Head of Macro Policy, said:
"This new report confirms what the Adam Smith Institute said in last year's report Burning Down the House—rampant demand and tightly-restricted supply are driving a huge and damaging rise in London house prices.
"Demand-stoking policies, especially Help to Buy, exacerbate the issue by driving prices upwards. The answer is to scrap these policies and allow housebuilders to build the homes the capital needs. Rolling the green belt out just one mile would create space for a million more homes, the LSE has estimated.
"Scrapping regulations on height, density and usage would allow hundreds of thousands more to be built. And paradoxically, affordable housing regulations are actually like to drive average prices up overall, as well as creating an inefficient distribution of stock. Help to Buy should be scrapped but the government should not to go too far in the other direction, distorting the market by putting an arbitrary limit on loans individuals can secure in the marketplace, as some have suggested.
"It is a scandal how much badly-off Londoners must plough into their rents, and the situation is getting worse and worse as we build at a rate that would have been paltry in the 1920s, with a UK population tens of millions fewer. If the government can give the planning system the liberalisation it badly needs it can stop another housing bubble and allow prices to return to an affordable level."
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The Adam Smith Institute is an independent libertarian think tank based in London. It strives to engineer policies and educate the public in order to create a richer, freer world.