Is it time to think the unthinkable on the green belt?

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The time may have come to think the unthinkable about London's green and pleasant land. The mutually reinforcing problems of a shortage of homes and spiralling prices may finally force politicians into an assault on the muchcherished green belt. Such ideas have been a policy no-go zone for decades. But unless radical solutions are considered, misery lies ahead for many lower-paid workers. Worse still, the capital's economy will be undermined.

It is easier to work out why London has such eyewatering housing costs than to propose palatable solutions. The British love for houses with gardens (coupled with an profoundly anti-urban distaste for flats) has made London a city with a tiny centre and massive, sprawling, suburbs. Even the names of the Tube stations in these suburbs - Arnos Grove, Mill Hill, Colliers Wood, Shepherd's Bush, Roding Valley or Parsons Green - are evidence of the aspirations of Londoners who moved out.

Densities are low: the average number of residents per square kilometre in London is half that of New York City. Beautiful, low-rise Paris packs in 20,000 people per square kilometre compared with congested inner London's 8,800. If the whole of Greater London were settled at Parisian densities, 35 million people would live here.

The key explanation for London's high housing costs is a chronic mismatch between demand and supply. A number of economic and demographic trends have pushed up the demand for housing.

Population has surged upwards. Economic growth has meant existing property owners look for bigger homes. Families no longer live together - there has been a massive increase in singleperson households. People are living longer. Some immigrant groups (heavily represented in the capital) have much larger families than the average.

Social and economic pressures for owner-occupation also play their part in London's house price free-for-all. "Getting on the property ladder" is a rite of passage. Renting is generally a way of life only for the mobile super-rich and the immobile super-poor. The desire to own property has been given further impetus by the collapse of the stock exchange and the consequent demise of reliable pensions. Bricks and mortar are the contemporary equivalent of gold bars under the bed. No wonder the buy-to-rent market has blossomed.

Mass international migration to London has raised the stakes still further. Such itinerant workers are a partial solution to the capital's high housing costs. Teachers, nurses and IT specialists from Australia and South Africa fill London vacancies while often living six or eight to a house. At such densities, they can afford far higher rents than a conventional one or two-income family.

Arrivals from many other countries in Africa, eastern Europe and Latin America live in all kinds of temporary accommodation (friends' floors, hostels and worse) and do jobs the British will not touch. New arrivals are good for London's economy, with benefits to both the labour and housing markets. For a little while longer, they keep the pressure off the green belt.

The supply of housing is constrained by the availability of land for development. The green belt makes it impossible for the city to move outwards. As a result, local councils and developers have been encouraged to recycle land - that is, to build on sites that were previously used for industry. London's docklands is by far the largest area of this so-called " brownfield" development in the country.

There are plenty more sites in the capital in places such as King's Cross, Stratford, the Thames Gateway, Wembley, Cricklewood and close to the Dome that could take large new developments. But, given the demands for new housing and jobs (the Mayor's recent London Plan estimates there will be 700,000 more residents and 600,000 more jobs in the capital within 15 years), the redevelopment of smokestack London may not be sufficient to cope.

Another way of increasing supply would be to use land more intensively - to increase densities. The main stumbling block to such a policy is a popular fear that density means over-crowding. In reality, higher densities can mean attractive city districts with good shops and public services.

Bayswater and Earl's Court are two central London neighbourhoods with population densities close to the Paris average. Commentators have made much of the benefits of London's traditional Georgian terraces and squares. New developments of such a type and scale would surely be popular while also boosting densities.

However, by far the most effective possible solution to London and the South-East's housing shortages and high prices would be the release of more land for development. Put brutally, is the green belt sacrosanct? However aesthetically desirable it is for London to have a bucolic doughnut, is it rational or fair in a part of the country with such high housing costs?

Efforts to protect green land extend well beyond the formal green belt which runs around the capital. The counties surrounding London have generally sought (with public support) to minimise incursions into agricultural land on the edges of towns and villages. Understandably, people who overlook the countryside want to keep their views.

But there is a cost to protecting green fields in the South-East. By rationing land, the value of existing housing is forced upwards, while those who do not own homes become relatively ever-poorer. Moreover, the region surrounding London is, despite all appearances to the contrary, not particularly crowded. The density of the East and South-East regions that ring the capital is 353 per square kilometre, which is marginally below the England average.

Even ardent green belt supporters know some of it is "grey" or "brown" rather than green. West of London, in an arc from Guildford to Watford, the countryside was eroded even before protective legislation was passed. Would similar levels of development to the east or south really be so dreadful?

Perhaps they would. In an apathetic age, few subjects stir voters more than a housingled threat to green fields. But if we are to keep every square inch of green belt, while also demanding houses with gardens, no intensification and maintaining snailspace planning rules, we will inevitably see sky-high prices.

Collectively, this may benefit existing property-owners. But for those trapped against their will in rented housing, or no housing, it will mean continuing misery.

Something will have to give - maybe the green belt.