Supply might be an issue, but the cost and nature in which they are available is just as big an issue. The current system, I would contend, doesn’t encourage the flexibility that a housing market needs because there are real disincentives to moving.
A phrase I’ve used before is that social housing is a destination, rather than a launchpad, for too many people. We could build thousands of 4 and 5 bedroom houses, but in 20 years when the children had left home wouldn’t we be in the same position again, with their parents still in a secure tenancy and all their children needing large properties? I would imagine that for them it would seem the obvious and easy choice to remain within the state sector.
I’m aware that it’s a debate in which I might risk sounding a bit ‘Daily Mail’, and it might well be that what I’m posing as a question is ultimately (perhaps sub-consciously) driven by my political philosophy that home ownership is desirable. Having said that, it is just as likely it reflects the prejudices of my left-wing working class parents and upbringing in which home ownership was the expectation and any reliance on the state was to be avoided.
But as you say, possibly all these notions are trumped by the deficit, and regardless of personal or political prejudices, the question is how we most effectively use the supply we have to match the demand.