Supply-side solutions are the answer to the housing crisis, says think-tank

The paper warned that only supply-side reforms which allow increases to the supply of British housing will "truly solve" the affordability problem and solve the housing crisis. This would have the added benefit of being "entirely balance sheet neutral" from the perspective of the public purse, it said.

The think-tank said that the Government's 2013 Budget, which introduced the Help to Buy scheme, made it clear that it viewed access to finance as the primary problem of the housing crisis and that it saw state intervention in the sector as the cure.

However, it warned that such measures would have the effect of raising the pricing of all housing while providing only a limited impact on available supply. "Higher prices mean reduced affordability, notwithstanding the credit-easing impact of the scheme. And the poorest potential homebuyers, whose circumstances preclude access even to Help to Buy, are the ones that will suffer the most," the paper said.

Recommended measures set out in the paper included the release of limited farmland for suburban development, "radical" liberalisation of urban planning laws and the abolition of mandatory affordable housing provision in new housing development.

"What such solutions have in common is that the obstacles to their implementation are political and regulatory, not economic," the paper said.

It concluded that radical liberalisation would present the possibility of making an "immediate and significant impact" on the housing crisis by freeing up national income for "productive enterprise" while keeping risk with property lenders, purchasers and developers rather than taxpayers.