- Housing costs are going up because the government is not building new houses at a decent rate.
In part, and I agree we need to build more homes.
However, demand is also part of the equation. If you're going to expand the population by 240,000 per annum (net) through immigration, then you need to be building 120,000 new units a year just to cope with that pressure, assuming migrants house themselves in couples/pairs, on average.
That's before you start considering other housing pressures such as an increasing birth rate; increasing longevity and old homes which are becoming uneconomic to maintain. Put all of that together, and we probably need to build 200,000 units a year to keep housing costs stable. In fact, we are building about 120,000 units a year, which barely covers the impact of migration and does nothing at all for domestic demand.
Whilst the big private housebuilders (Taylor Wimpey etc) remain active, the smaller guys vanished in 2008 and haven't come back, because the banks won't lend to them. In turn, this is because the banks have been told to stay away from risky exposures, and small housebuilders are particularly risky.
Putting public money into new housing isn't a bad idea, because the debt is repaid through the rental income stream the asset generates. However, at present there is quite a serious shortage of qualified labour and materials (eg bricks), which would need to be resolved before you ramped-up production. Almost certainly, you would end-up importing skilled labour to ease the housing shortage, whilst at the same time contributing to it!