New Public First research finds the best approach to making homes more affordable is to build more higher value homes as part of a wider policy of building more homes of all types and sizes.
The research uses over 20 years of Land Registry data to test the price effects of new homes at higher price points on the affordability of homes at lower price points. It provides strong and compelling evidence of a ‘market filtering’ effect, finding:

• An increase in the number of larger homes built would do more for affordability than the construction of smaller homes;
• Building larger homes is most effective because it creates a ‘filtering’ effect: allowing people to trade up, kicking off a chain of moves that frees up smaller and cheaper home;
• A relatively small increase in the proportion of larger high value homes in the mix would make entry-level homes around £2,500 cheaper to buy.

The report argues that developers should be given more leeway to build the type and size of homes that they think will sell or rent. This would increase build out rates, which is the surest way to see supply increase, and is the best and most reliable way to make homes more affordable for all.