For years, the industry has told itself a comforting story: governments and politicians might make mistakes but ultimately they want to fix housing supply. Instead the problems lie with established communities and home-owner self interest seeking to block new homes due to concern over price drops.
However, research published stateside last years suggests the real blockage sits in ideas around “folk economics”. The finding comes from a 2025 paper by Elmendorf, Nall and Oklobdzija, based on three preregistered, nationally representative surveys of urban and suburban residents designed to test how people understand housing markets.
It found that ordinary people have little feel for whether a big, positive increase to their metro region’s housing supply would make housing more affordable. However, they do have a clear set of “folk economics” beliefs about who is to blame for the high cost of housing and unfortunately, that can be exploited to the detriment of new housing development.
Start with preferences. 85% of renters and over 55% of homeowners say they want lower housing costs. That last figure matters. It cuts directly against the “homevoter” narrative that owners are structurally opposed to falling prices. Actually not the case. So far, so aligned perhaps with “build more”.
But when people are asked what happens if supply actually increases, things unravel fast. Faced with a 10% increase in housing stock, only 25–33% think prices would fall. Between one-third and one-half think they would rise. That’s not a fringe misunderstanding. That’s the median voter and it shows supply scepticism is distinctive to housing. In any other sector, people accept that if there is more of something available, prices drop. Not with housing.
If people don’t believe supply lowers prices, then pro-supply policy doesn’t look like a solution. It looks like a concession—to developers, to “profiteers”, to the very actors many voters already distrust.
So politicians respond accordingly. Take the London playbook. Policies like fast-track routes and late-stage viability reviews aren’t just technical interventions. They are political settlements.
They operate on an implicit premise:
- Developers will overpromise and underdeliver
- Value must be captured, not created
- And affordability comes from negotiation, not volume
That logic only holds if you don’t believe supply materially shifts prices or that you know that your voter base isn’t going to have a problem with that kind of narrative. Crucially, the democratic mandate underpinning these approaches is wafer thin. Take the average London planning committee member. They represent just 19% of registered voters in their ward, with some as low as 8% and even the best only 27%.
In other words, a small, highly engaged minority can shape outcomes and can get away with arguing for rationing even in the face of evidence to the contrary. The survey evidence in this paper reinforces this dynamic. When asked who is responsible for high housing costs, developers and landlords top the list, while structural constraints like planning barely feature. And when it comes to solutions, over 85% support rent controls, subsidies and restrictions on investors.
Meanwhile, the policies that actually expand supply—upzoning, reducing development costs, enabling market-rate delivery—rank lowest on both support and perceived effectiveness. In other words, the politics is logical, it’s just economically wrong.
The uncomfortable reality for the industry is this: the pro-development lobby is losing the argument. While it leans on technical evidence, opponents are winning on narrative—casting development as extraction, not solution. In that vacuum, degrowth instincts fill the space: less building, more control, more redistribution of a fixed pie.
We see this most clearly in recent policy thrusts like the launch of the GLA’s Key Worker Living Rent. Politically, it’s almost unarguable—targeted support for nurses, teachers and essential workers priced out of London. But in delivery terms, its marginal: 6,000 homes by 2030—around 1,200 per year in a city that needs tens of thousands annually.
Lots of energy has been expended. But such a policy won’t unlock land, reduce build costs, or improve viability. Instead, it layers another pricing mechanism onto an already constrained system—redistributing affordability within scarcity rather than resolving it. The focus shifts from how much we build to who gets access to what little is built.
The uncomfortable truth is the planning system isn’t simply constraining supply—it’s encoding voter misunderstanding, amplified by low-participation local democracy which enables a degrowth mindset to thrive. Until the development sector finds a way of cutting through, every new housing policy initiative will be couched in more obligations, more reviews, more friction. This is a belief problem and we must find a way of changing the narrative.
