The Competition and Markets Authority (CMA) cautioned on Monday that the housing market in Britain is plagued by fundamental issues hindering the construction of more homes, marking a

pivotal battleground in the upcoming elections.

In a significant move, the CMA announced an inquiry into eight major housebuilders in the UK to investigate potential sharing of commercially sensitive information among them and whether such practices undermine competition. The companies under scrutiny include Barratt, Bellway, Berkeley, Bloor Homes, Persimmon, Redrow, Taylor Wimpey, and Vistry.

This development prompted a 2% drop in the shares of British housebuilders during early trading, with Persimmon experiencing the steepest decline at 3%.

CMA Chief Executive Sarah Cardell emphasized the need for significant intervention in the UK housing sector to ensure the construction of sufficient high-quality homes in areas of demand.

Housing scarcity has long been a contentious issue in British politics, with soaring property prices and rental costs alienating many younger voters. The ruling Conservative Party, led by Prime Minister Rishi Sunak, faces conflicting pressures, as some lawmakers oppose increased construction in rural regions while others advocate for accelerated homebuilding in urban areas.

While the government asserts its commitment to delivering one million new homes by the next election, it is unlikely to fulfill its pledge of constructing a net 300,000 new homes annually in England by the mid-2020s due to uncertainties surrounding planning policies.

The CMA's year-long market study revealed that a convoluted and erratic planning system, coupled with speculative housing development, perpetuates the housing shortfall. Last year, fewer than 250,000 houses were constructed in England, Wales, and Scotland combined, falling well short of government targets.

The opposition Labour Party, poised to challenge the Conservatives in the forthcoming elections, has pledged to overhaul the planning system to bolster housing construction rates, even in rural areas if necessary.

Although the CMA acknowledged that potentially anti-competitive conduct among housebuilders is not the primary driver of market problems, it expressed concerns that such behavior could undermine competition and impact new home prices.

Major UK housebuilders have consistently cited planning system challenges, notably prolonged property approval delays, and have urged government intervention to address the issue.

As of now, the Home Builders Federation, the primary industry association, has not provided immediate comment on the matter.