Rethinking the Housing Crisis:
In 2017, the then Prime Minister, Teresa May, signaled her government’s determination to address England’s key housing issues through the publication of the White Paper, Fixing England’s Broken Housing Market. In the foreword, she referred to the increasing unaffordability of housing for rent and purchase and signaled a determination to build more homes, an action intended to slow the rise in housing costs. The ambitions set out in the White Paper were developed further in the 2019 Conservative Manifesto2 which set a target of building 300,000 homes per year by 2025.
However, since 2017, issues around affordability at a national level have worsened: in 2017 the median house price to income ratio was 7.91, by 2021 it had reached 9.05. Similarly, median house prices have continued to rise above inflation: in 2017, the median house price in England was £230,000, by 2021 it had risen to £285,000 (a 23.9% increase over the period).
Median rental costs echoed the pattern with house prices: in March 2017 the median rent for a one-bedroomed property in England was £600 per month,3 by March 2021 the figure had increased to £700 per month (a 16.7% increase over the period). Over the same period, the rate of inflation (as measured by CPI) was 6.7%.
Similarly, the target of 300,000 new homes per year had not been reached by 2021, with annual completions creeping up from 147,505 in 2016/17 to 154,631 by 2020/215 (a small increase of 4.83%). The situation with affordability and new supply had led many commentators to caricature the situation as one of permanent crisis, with Sky News recently reporting that the failure to build enough homes was, “forcing people into house shares and limiting migration to major cities”. The FT also published a series of reports about housing issues, commenting that, “The housing crisis sits at the center of Britain’s ills”. Most recently, the Daily Express’s property reporter concluded that “the property market in the UK is well and truly broken”.
Whilst such reportage is useful in raising the political profile of housing affordability, the simplification of the “crisis” as a national phenomenon that can be tackled by simply increasing supply obscures the different features of rising house prices/rents. It also downplays the different facets and natures of housing affordability issues that occur at regional and local levels.
This report aims to bridge the information gaps, by focusing on affordability issues in England and considering some of the key factors which influence housing costs. It reveals a set of nuances and contradictions that have not been sufficiently recognized or addressed by existing policy interventions and are also insufficiently researched.
The report engages with the UK2070 Commission’s Make No Little Plans (2020) which invites the policy community to positively envisage what we want the UK to look like in 2070 and identifies the potential consequences of current trends, including the future affordability of housing given current rates of house price and rental inflation. The report aims to provide some of the key evidence needed to rethink the housing crisis and identifies some of the key features of the housing crisis relating to affordability.
In policy terms, the UK2070 Commission recommends that the government fundamentally reviews housing policies to integrate housing as part of infrastructure policies and that housing policies are integrated into local governance arrangements for a more strategic but devolved approach to planning for housing.
It is important to note that Whitehall has yet to publish a comprehensive policy document which encapsulates the aims and objectives of its housing policies. Although there are frequent references to the nature of problems such as undersupply, affordability, rising costs of owning and renting housing, lack of regulation, poor energy efficiency, falling owner-occupation, and homelessness, there is not a comprehensive policy response to these issues.