Affordable Housing:
This review focuses on policies promoting housing affordability in the private and social rented sector and, in particular, on supply-side policies, for which international comparison can be especially instructive. The review focuses on policies supporting a ‘dualistic model’ (e.g. boosting homeownership; restricting access to social housing) and policies supporting a ‘social market model’ (e.g. regulating and subsidising the private rental sector; widening access to social housing).
In line with the rest of the UK, in the last 20 years, Wales has witnessed growth in the private rented sector and a fall in social housing – the former grew from 7% in 2001 to 14% in 2019 (JRF, 2020), the latter fell from 20% in 1997 to 16% in 2019 (Statistics for Wales, 2019a). While the size of the social rented sector has remained relatively stable over the last ten years, its composition has changed. Between 2009 and 2017, the proportion of social housing owned by local authorities fell from 8% to 6% while the proportion rented from Registered Social Landlords (RSLs) increased from 8% to 10%. This is predominantly due to the large-scale voluntary transfers of stock from local authorities to RSLs. While building by local authorities essentially stopped in the middle of the last decade, it recently started again with 138 new local authority builds completed between 2017 and 2019. In the same decade, 9,789 new RSL dwellings have been completed. Both the overall proportion of social housing and the share owned by local authorities are comparable to those in England, while Scotland has a larger social housing sector (22%), and both Scotland and Northern Ireland have a larger share of housing owned by local authorities (12%) (Statistics for Wales, 2019a; ONS, 2019). Over the same period, owner-occupation fell from 76% in 2001 to around 70% in 2019, remaining stable since 2012.
House prices have been increasing in Wales at a faster rate than in other UK nations (by 16.7% over the year to June 2021), confirming an upward trend that since 2015 has Wales only coming behind England in average house prices (ONS, 2021a). Meanwhile, increases in earnings have lagged behind house prices (ONS, 2021b). While this suggests that affordability has worsened in Wales overall, new dwellings have remained less affordable with a ratio of house prices to earnings 44% higher for new dwellings than for existing dwellings. Disparities across areas remain, with median prices ranging from £46,250 (within Rhondda Cynon Taf) to £600,000 (within Cardiff) (ONS, 2021c).
Housing costs have been identified as a key contributor to the rising living costs that are a driver of poverty in Wales (JRF, 2018; 2020). Among the poorest fifth of working age adults, 42% were spending more than a third of their income on housing–an increase from 36% in 1994-97 (JRF, 2018). Despite slow private rent increases and times of real-terms reductions in housing costs over the last ten years, poverty rates amongst private renters remain higher in Wales than elsewhere in the UK, at around 41% (JRF, 2020). Private renters are also more likely to be overburdened with housing costs compared to other tenures: 39% spend over a third of their income on housing (JRF, 2018). During the Coronavirus pandemic private rental prices grew by 1.5% in Wales in the 12 months to May 2021, a higher rate of increase than in England and Scotland but lower than in Northern Ireland (ONS, 2021b).
Tenants in the social rented sector are also more likely to be living in poverty compared to private renters and owner-occupiers, with a poverty rate stable at around 48% since 2016 (Welsh Government, 2021) – a level much higher than any of the other nations of the UK (JRF, 2020). Social housing tenants are also disproportionately more likely to live in material deprivation (46%) compared to private renters (31%) and owner-occupiers (7%) (Carter, 2022a). Across the UK, there is evidence that the depletion of the social housing stock has been felt most keenly by young people.