The UK has experienced a long-term upward trend in real house prices. This has created problems of affordability. In addition, the volatility of the housing market has exacerbated problems of macroeconomic instability and had an adverse effect on economic growth. Higher and more responsive levels of house building, leading to a lower trend in real house prices, would benefit the UK in economic terms. But taking account of the environmental costs is also critical in determining the optimal level of house building for the UK. The environmental costs of greater housing supply can be reduced, by increasing densities or through more efficient use of existing land and buildings: however, it is clear that more Greenfield and brownfield land will be needed if an adequate supply of houses is to be delivered. Household formation, based on the 2001 Census, has been estimated at 179,0001 households per annum in England, yet only 134,000 extra houses were built in 2002. Rising demand for housing implies higher rates of house building are necessary.