time on record, the number of households in England has overtaken the number of homes. In London alone, officially homeless households are likely to double, to 110,000, within ten years. Some 225,000 new homes are needed in England every year, according to the Rowntree Foundation, but only 140,000 are being built. The result is that prices in the United Kingdom last month rose more steeply than they have ever done before: the cost of a home increased in April by an average of pounds4000. By 2020, a report published three weeks ago suggests, the average price of a home could reach pounds300,000, or pounds600,000 in London.

The shortfall is blamed by the House Builders' Federation on greens campaigning against new development in the countryside. In reality its own members appear to be the principal culprits. Last week, the Town and Country Planning Association revealed that construction companies -- of which just a handful control much of the UK's potential building land -- are sitting on their assets in order to increase the value of the homes they sell. They have little incentive to build now if they can ensure that prices continue to boom. They have no incentive whatsoever to solve the underlying crisis by building small cheap homes rather than large expensive ones.

But it is also true that many of those trying to preserve the exclusivity of their communities have sheltered behind environmental arguments, providing the housebuilders with the excuses they need to sit tight. Some greenfield development will be necessary, and genuine environmentalists must ensure that their campaigns cannot be used as the drawbridge which keeps the poor out of the rich man's castle.

There are plenty of solid arguments for fighting sprawl, keeping new development as compact as possible, regenerating run-down inner cities and using brownfield land before building in the countryside. Good urban design cuts crime, encourages social integration, permits effective public transport and reduces inequality. Without it, cities "dough-nut": the core dies, while the suburbs splurge. But good urban design is the enemy of the big development companies. Building on greenfield land is cheaper than clearing existing sites and, if the land was bought at agricultural prices, far more profitable.

But there are also some inherent contradictions which neither environmentalists nor planners have properly addressed. One of these is the paradox of regeneration. By rehabilitating a rundown area, in order to improve the lives of the poor, regeneration often drives out the very people it is supposed to help, by raising house prices. By attracting companies to move into places which they have previously shunned, it can boost overall economic activity while reducing the amount of money circulating in the local economy, as small businesses are displaced by multinationals expatriating their profits.

This is just one example of the clash between liveability and inclusivity. House prices rise fastest and furthest in places with a pleasant environment: by ensuring that communities stay compact and well-served by public transport and public spaces, both councils and campaigners can accidentally ensure that only the rich can afford to live there.

What problems of this kind suggest is that housing provision simply cannot be left to the market. Environmental quality and social justice can be reconciled, but only if the government is prepared to intervene. The first measure it must take is to use planning law to hold down the cost of land. Development land reaches the value of the most lucrative use to which it can be put. If land is zoned only or largely for affordable housing, then its price falls accordingly. This zoning would have to be accompanied by a time limit (after which the land reverted to the community), to prevent developers from sitting on it pending a change of policy.

Then the government needs both to raise revenue and to address the extraordinary inequalities caused by house price inflation, by levying a land value tax on development land and a capital gains tax on main residences. The money this raised could then be used for building the social housing Britain needs.

There is no room for second homes where others have none. The privatisation of council housing should be reversed, as stock transfer almost always leads to rising rents (ensuring that housing benefit becomes an ever-growing subsidy for the banks). Car-free developments, whose residents receive tax rebates in return for relinquishing their cars, would allow compaction without sacrificing environmental quality, making use of the vast amount of land that planning law insists is allocated to parking. Perhaps, as this column has suggested in the past, we need to consider moving the capital, diverting some of London's