First transport. Then hospitals and schools. And now housing. Our latest national crisis is the shortage of affordable new homes. London is worst affected, but even Reading's prices are out of reach of nurses and teachers. Once again, we are paying for decades of underinvestment. At a time when the formation of households is growing 22% faster than predicted five years ago, we are building fewer homes than at any time since 1924. Within 15 years there will be a shortfall of 1.1 million homes, according to the Joseph Rowntree Foundation. On top of this, 1.7 million existing homes are unfit to live in. Even with an entire mountain range of cash and dramatic shifts in policy, the creation of a 21st-century housing stock will take a generation.

We have to start somewhere, and at least ministers appear ready to grapple with the big, uncomfortable questions. Unfortunately, answers remain elusive. Lord Falconer will spend £10bn repairing one-third of substandard homes by 2004. But as Gerald Kaufman points out, that will still leave a million uninhabitable (pages 31). More ambitious is Stephen Byers' scheme to transfer 720,000 council homes to housing associations, as a means of leveraging private finance. About 90,000 tenants in Glasgow will vote on it today. But even with the Treasury's promise to write off £900m of the city's debts, recalcitrant local politicians are urging tenants to reject the deal, as those in south London's Aylesbury Estate did in January. There is also a national campaign against transfers led by Defend Council Housing and – you guessed it – Unison.

Nick Raynsford's attempt to launch housing PFI is in even worse trouble. After two-and-a-half years, work hasn't started on the eight pathfinder schemes, with Whitehall, councils and contractors all bickering over funding (pages 24-25). It's early days, and some of the problems echo those facing the first PFI schools, but fundamental questions remain over what private finance can bring to tarted-up housing estates.

In the private sector, ministers' efforts have centred on overhauling the reviled planning system and adopting Ken Livingstone's 50% quota for affordable homes nationally (see news). However meritorious their ideas, they don't begin to slow the rise of house prices. The average in London is a barely believable £208,000. With demand outstripping supply, the affordability gap will only narrow if there's a crash, or if councils are persuaded to be more forthcoming with land and planning permission. Sadly, as Roger Humber writes, nothing in the green paper suggests that Falconer has found a way round antediluvian councillors and the green lobby.

In one sense, house price inflation suits the government. With share prices moribund, people's plum asset is now their house, whose soaring value encourages them to spend, spend, spend – so helping the economy stave off recession. But it also encourages them to borrow, borrow, borrow, so the consequences of a property crash will be more severe. Really, there's no alternative to reform. Ministers must outface the luddites. They must press ahead with the PFI, complete stock transfers, and release more land. And construction, which has plenty to gain, must publicly back them (as it failed to do over PFI hospitals). There's just a chance of ushering in a new golden age of housebuilding. And if that can't happen under a Labour government, it never will.