The Competition and Markets Authority report on the housing sector should be a boost to the Yimby policy machine. It expressed grave concerns about the housing market operating like a cartel, and said that much of this was enabled by the current planning system.

The CMA was tasked with looking at the housing market a year ago, because targets are consistently missed, prices are consistently rising, and there are allegations that tactics such as ‘land banking’ are used to drive up profits. The result was a strong indictment of the planning system as it currently stands.

The report found that under-staffed planning departments, combined with a veto-heavy system, made getting permission to build protracted and unpredictable. This both limited the flow of new houses and squeezed small and medium-sized developers out of the market, enabling bigger players to bank massive profits and abuse their dominance.

A further investigation was launched into eight of the biggest builders for potential anti-competitive practices. This includes cartel-like behaviour such as sharing price information and discussing incentives for homebuyers. This seemingly ‘prevented and distorted’ competition among Britain’s biggest housing developers, further entrenching high prices.

Overall, the report seems like a vindication for those pushing for a liberalisation of the planning system. The restrictions of the Town and Country Planning Act make it hard and costly to build, which in turn favours those developers with the funds to navigate the system and the cash flow to wait years for developments to come online.

The report linked this to the poor quality of new housing too. It found that the average homeowner faced 16 snagging issues on moving into a new build, ranging from minor issues to a ‘substantial minority’ of problems as grave as collapsing ceilings. These often took months to be fixed. The CMA drew the same conclusion as many housing activists on this – that the limited supply of homes to the market means that developers have no incentive to compete on quality. Purchasers simply don’t have the choice to be fussy.

Purchasers simply don’t have the choice to be fussy

Additionally, the report skewered one of the most persistent anti-housing building myths – that of land banking. Developers have been repeatedly accused of sitting on land with planning permission to distort the market, an argument often invoked against the giving of new consent to build. The CMA gave this short shrift, finding that it was the result of inefficiencies in the wider market, largely driven by the ‘time and uncertainty’ involved in the planning system. The fix, it follows is more permission, not more.

The report is largely a vindication of what wonks have argued for ages – that an outdated, slow-moving planning process is the root cause of the housing crisis. Artificially limited supply drives up overall costs, impedes quality and allows developers carte blanche. The question now is what the political response will be.

The investigation into building companies may lead to fines and punishments, but beyond that, the CMA report lacks the power to act on the issues raised. That is for the government to do. Unfortunately, there remains a difficult impasse around planning. For the Tories, most of these answers will have been known already and will do nothing to move them. They remain cosy with the major builders, and politically dependent Nimbys, neither of which will push them for a rapid liberalisation of planning.

Labour are more likely to be seduced by the report’s other findings against the ‘private speculative’ nature of the building. The CMA argued that the private sector was failing to deliver affordable housing and that previous targets had only been met with public sector building programmes. Rather than biting the bullet on planning reform, the left might be more tempted to kick up council house buildings. This, however, seems an error when building booms in other countries are considered. In Texas, California and New Zealand, simply getting out of the way of the bulldozers and brickies was sufficient.

In almost every other market, we’ve come to accept that overbearing regulation is the bedrock of restricted supply, high prices, and market abuse. It seems perverse that housing should be any different. Today’s report should puncture some of the Nimby myths around why housing is so expensive and be good evidence of why liberalisation will clear away a whole bunch of issues.

Politicians constantly talk of the promise of houses that are cheaper, better, and more beautiful, yet seem to baulk at the measures that might allow this. Today’s report should be a helpful riposte to some of the myths they cling to, and a nudge towards the realisation that liberalisation is the only way forward. Quite simply our housing market is broken, and a lack of free supply is at the heart of it.