The 1945 Labour manifesto promised to “proceed with a housing programme with the maximum practical speed until every family in this island has a good standard of accommodation”. Similarly, 1951’s Conservative manifesto crowned housing as “the first of the social services” explaining that it is “one of the keys to increased productivity”. Sadly, some time in the last 75 years we have forgotten these lessons.
In November 2022 the average home in the UK cost over nine times the average salary. For contrast, in the 1980s the average home would set you back just three times the typical wage. The consequences of this for society are plain to see. May Rostom, a senior modeller and economist at the Bank of England, recently found that those who have a gift from what has become known as the bank of mum and dad are able to put down deposits twice as large as those without parental support. That means first time buyers with richer families have smaller mortgage payments and get on the housing ladder more than a decade earlier than those without help.
The effects this has on individual well-being is huge. When people are forced to rent for longer they end up spending more on their housing than someone fortunate enough to have a mortgage. The ONS reports that renters spend 24 per cent of their median weekly expenditure on housing costs, compared to 16 per cent for homeowners with mortgages. Unsurprisingly, this worsens renters’ quality of life, leaving them able to spend less on essentials and to save much less. The Joseph Rowntree Foundation found that 46 per cent of those living in socially rented accommodation, and 33 per cent of people in the private rented sector, are stuck in poverty. This compares to just 15 per cent of those who own outright and 10 per cent of people with mortgages. Private renters are also twice as likely to suffer from anxiety than homeowners.
When discussing this crisis there are certain persistent and pernicious myths which must be addressed. First is the argument that our desperate housing failures can be explained by a claimed mass of empty homes. We know for a fact this can’t be the case – according to the OECD only Switzerland and Iceland have fewer empty homes than us (in proportion with their much smaller populations). And yet, housing is more affordable in almost every other developed country. We also know the root cause isn’t the practice of so-called land banking, since this can only be rationally explained by the natural desire for developers to manage the risk of planning permission not being granted.
[See also: A generation locked out]
Finally, we know that demand-side factors can only explain a small part of the problem. A 2016 paper in the peer-reviewed academic publication The Economic Journal found that when demand increases it leads to a much larger increase in prices in areas where housing is most difficult to build. This is because housing in Britain is what economists call inelastic. This means that supply cannot respond to an increase in demand, leading to a disproportionately large increase in prices. The answer to this is that we must build more homes to allow inevitable changes in demand to be properly accommodated by supply changes.
The scale of this crisis is larger than most people understand. The Centre for Cities think tank has found that had we tracked just the median European nations in housebuilding since the Second World War we’d have another 4.3 million homes. Even if we did meet the 300,000 homes a year target that the government set itself, it would still take us fifty years to close this gap.
The crisis has now reached breaking point. Ensuring that everyone can afford a safe place to live goes beyond party lines. It requires every one of us to work together to ensure Britain delivers homes we need.
That is why I have become a parliamentary champion for PricedOut – a leading campaign group for housing affordability. Since 2006, PricedOut has fought for all those affected by the housing crisis, urging parliamentarians and politicians across the country to tackle the housing shortage. That’s why I am delighted to be joined by my friend Andrew Western, the extremely talented Labour MP for Stretford and Urmston. We both plan on adding our voice to the growing, cross-party call for action, and we hope colleagues from both sides of the aisle will do the same.
Getting this work right is more important now than ever before. The government’s abandoning of housing targets has derailed dozens of local plans. Onerous yet ineffective nutrient neutrality rules have stymied housebuilding and the poor state of the economy has resulted in developers holding off on developing allocated land until their profits can be guaranteed. All told, we could be facing our worst year for housebuilding in decades. Solving these problems does not merely mean reversing the mistakes that the government has made in the last year. Administrations of all stripes, going back decades, have failed to grip the housing issue. We need lasting reform to fundamentally change the political economy around housebuilding.
PricedOut call on all parties and parliamentarians alike to come together, put aside political differences and recognise we are facing an acute housing shortage that is acting as a drag on the wider economy. A growing coalition is developing with those who share our vision that so many of the country’s problems can be solved by building more homes. If we fail to tackle this crisis now, we will fail entire generations who will continue to be priced out of the housing market, forced to shovel their hard-earned money into the rental abyss. The answer, simply, is to get building.