The UK is heading towards an existential housing crisis, where, per the Office of National Statistics (ONS), house prices have more than trebled in the last 20 years. Fewer under-25s are buying homes, whilst house prices are very expensive for first-time buyers, with low income families having little to no help to get onto the Housing Market.
Social housing waiting lists have risen whilst rents are becoming increasingly expensive, housebuilding is at its lowest peacetime position since the 1920s. However, the UK still compares well internationally on overcrowding and unaffordability.
An impending crisis
The housing bubble will burst and it will come crashing down sooner rather than later. But whilst many say there is a Housing Crisis, I am inclined to believe there is almost a crisis. The reason being is the cost of the average house, per the ONS is £265,000, but this only considers a figure from a sample of mortgages agreed by regulated lenders.
But the Land Registry, who keep a record of every sale (mortgage or otherwise), say the average house price is £180,252. Whilst the figures suggest there is not a crisis, the bubble will burst soon anyway. Despite these figures, fewer under-25s are buying houses, this is mostly down to the fact that relative to income, house is far more expensive.
Housebuilding is at its lowest, social housing waiting lists have risen and rents have become more expensive. The UK though still compares well internationally to overcrowding and unaffordability. But per ONS figures house prices have more than trebled in the last 20 years.
Concerning statistics
The Economist compiled a comparative house pricing index and they found that the value of British homes had seen an increase of 2000% within the last half a century, significantly higher than our global counterparts.
With German house prices doubling and US house prices increasing 650% within the same period.
Eurostat (the European Union’s statistical arm) state 7.4% of Brits were ‘overburdened’ by housing costs, spending more than 40% of their income to keep a roof over their heads. Surprisingly this is below the EU average of 11.2%, with Germany, Spain, and the Netherlands at 16.6, 14.3 and 14.4 per cent respectively.
The UK still compares well when looking at the wider picture.
Even though the statistics push towards the idea that there is a housing crisis, there is considerable evidence that it hasn’t quite hit crisis levels just yet. Despite the sharp rises in prices and fall in house building, the UK still fares comparatively well with overcrowding and affordability.
A wider issue
Last year, Housing Minister, Gavin Barwell, said that grandparents should hand inheritance directly to their grandchildren. He has suggested that this is a viable way to tackle the impending housing crisis. This underlines how out of touch Tory MPs are with the public. Some are lucky, most aren’t but what makes this statement worse is the lack of understanding to the issue.
If we look at the statistics it is fair to say that they are mixed, however, it is apparent that housing is going to have a crisis if something isn’t sorted soon. More houses are required to be built and the disastrous Right-to-Buy scheme has failed. Social housing is needed and private landlord rent controls need to be reintroduced.
If you look at the Land Registry stats this tells us that it is possible to buy well, but it is wider issues that makes it difficult for younger people. With wages, comparably lower in relation to house prices, and private landlords able to buy out entire streets and set the rents as high as they want. This makes housing an issue that is far wider than just building more houses.
