Mentions UK Collaborative Centre for Housing Evidence (CaCHE)

In the years following the 2008 global financial crisis, the “big three” housebuilders that dominate the new-build market in Britain have been able to increase their profits without significantly increasing the number of homes they build. This has happened despite political pressure to increase UK housing supply.

They were able to do this, we argue, because they have built up significant structural power: they can use their control of housing land and housebuilding to secure state support for initiatives that benefit their shareholders by pushing up their share prices and profitability.

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We argue this state support via planning liberalisation has given volume housebuilders what’s called monopsonistic market power in local land markets. In other words, it’s created a buyer-dominated market. This has kept the cost of their land relatively flat while UK house prices continued to rise. 

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When market power in local land markets was combined with structural power over the state, we believe volume housebuilders were able to increase their profit margins rather than ramp up delivery to help the government meet its target of 300,000 new homes per year in England. Our research shows it was in the interests of the volume housebuilders not to rapidly increase their housing supply for two main reasons.