The DCLG consultation paper states:
There is a longstanding principle in planning policy that assessing an appropriate level of housing must address the affordability of new homes, which means in practice that projected household growth should be adjusted to take account of market signals.
House prices in an area could increase for a number of reasons – popularity of area because of local amenities; demand for other uses (holiday sector); rising incomes in area.
Affordability of housing is an issue for those whose earnings are below a certain level. Unless the distribution of incomes is suddenly changed to minimize the number and share of low earners there will continue to be significant groups who cannot afford to purchase a home (or rent). Does anyone seriously think that house prices could be reduced to enable someone on £15,000 a year to have a mortgage on the 4.5 loan-to-income ratio? House prices would have to be as low as £67,500!
Rather than attempt to deal with affordability by building houses the answer should be to provide social housing or increase the social funding of housing.