March 14 (Bloomberg) -- England faces a shortfall of 750,000 homes by 2025, with London forecast to experience the worst mismatch between supply and demand, the Institute for Public Policy Research said.
London will have a shortfall of 325,000 houses, followed by Yorkshire and Humberside in the north of the country with 151,000 homes, the London-based organization, which uses the government’s own projections for household growth in its forecasts, said in an e-mailed report today.
"Britain needs to build more homes,” Nick Pearce, IPPR director, said in a statement. “If the rate of house building doesn’t radically increase, we face a growing housing crisis. Whether the economy performs well or poorly, a serious gap looms between housing supply and demand."
A shortage in the supply of homes for sale is underpinning prices even as banks curb credit and the economic recovery is threatened by the biggest budget squeeze since World War II. Acadametrics Ltd. reported on March 11 that prices rose 0.3 percent in February. The Bank of England kept interest rates unchanged last week at a record low of 0.5 percent last week.
The North West of England will be the only region forecast to meet housing demand, with 40,000 extra homes, the IPPR report showed.
The number of U.K. mortgage approvals fell 29 percent in January from the previous month to 28,500, the Council of Mortgage Lenders said on March 11. Acadametrics and LSL Property Services Plc said that the increase in house prices last month was due to "pent-up demand."