Whilst the difficulties of Brexit have locked Westminster into endless clashes, for the general public a poll* has found they have a more pressing concern – namely the country’s lack of affordable housing.
The problems faced with regards to the lack of housing supply are stark; the UK has not built enough new homes for more than a generation and a raft of government initiatives have made very little impact on delivering more houses
Here are 5 key facts that will challenge how you think about the housing crisis:
On average in the UK, we have built 140,000 homes, a long way from the 400,000 homes completed per year in the 1960s.
However, the UK population is growing at 1%, which is adding around 270,000 new households per year. In addition, we have an existing chronic shortage of housing from decades of underinvestment.
Therefore, we need to build 270,000 homes per year to keep track with population growth, or around 350,000 to reduce the current shortage of housing.
Despite decades of house price inflation, house building in the UK has been steadily falling. There are few other markets where there are increasing prices with falling supply.
The average house price has increased by 500% in 30 years, the price of that average home is now in excess of 8 times average salaries effectively doubling over that period and is considerably more in certain areas. For decades house prices have increased while house building has fallen.
Unsurprisingly UK house prices have increased faster than most other countries.
Since 1980 UK house prices have increased by around 10 times; this compares to around four times for the OECD (Organization for Economic Cooperation and Development) and Euro area. Adjusted for inflation UK house prices have increased by more than any other OECD country, except New Zealand.
4) House price rises are driven by bank lending
How have we all afforded such a dramatic increase in prices?
Our insatiable appetite for housing has been filled by ever higher bank lending. Total mortgage book values have increased 24 times since 1980, to now stand at just over £1trillion.
Our banks provide us with an ever-increasing capacity to buy houses, but instead of going into house building, this money enables us to buy houses back and forth from each other at ever higher prices.
5) Only 1% of UK land is housing
We live in a small crowded island, and we need to protect our countryside, but we should put this in perspective. 6.8% of the UK's land area is now classified as ‘urban’ (a definition that includes rural development and roads, by the way).
Put another way that means almost 93% of the UK is not urban. But even that isn't the end of the story because urban is not the same as built on (i.e. these numbers include gardens and parks). In contrast 9% of land is protected in national parks, 12% as the green belt and 15% as areas of outstanding natural beauty.
Building 350,000 houses is only increasing our housing stock by 1.3% per year and hence only involves building on 0.01% of land each year; a small loss to solve the housing crisis.
This leads a conclusion that house building needs radical reform, building needs to double to make a dent in our housing shortage. The current structure of our housing market is broken; house building is falling while prices are rising, despite the fact the price of an average home is nearly twice the cost to build one.
This is exacerbated by bank lending providing us with an increasing ability to buy houses. We are rightly protective of our countryside, but housing is only 1% of land use. What value do we place on a green field versus the cost of our current housing shortage?
(* Ipsos MORI - “Rethinking Social Housing” by the Chartered Institute of Housing in June 2019)
Could you land have development potential?
Dawn Adams - Planning Manager
Catesby Estates plc
01926 836910 / firstname.lastname@example.org