When I arrived in the UK in 1981 housing was abundant and cheap. I was able to purchase a house well within a year and there were many available starting at about 75% of my annual salary (£6,500 as a Post Doc in the University of Sheffield) but I purchased one on an 80% mortgage at about 1.5 times annual salary (£10,000). Admittedly this was in South Yorkshire where property prices were below the national average. Thirty five years later the situation is markedly different. It would not be over dramatic to say there is a housing crisis.
The Redfern review, states real house prices have jumped 151% since 1996, while real earnings have risen only about a quarter as much. A report by ResPublica says 1.2 million people are languishing on housing waiting lists in England, while more than 6 million face tenure insecurity with no prospect of ever buying their own home.
I was in Kew Gardens at the weekend and looked at the local estate agent by the Underground station. Very modest flats were around £500,000 and decent houses around £4 M. It’s no wonder that so many people move out of London. On a more local level, my own house, in rural Northumberland, (featured on the Progressive Pulse title page) which was purchased in year 2000 has gone up by a factor of three in price; I would never be able to afford it now. Indeed when purchasing it we factored interest rates at 15% PA as a worst case scenario and decided we could just about manage; it is terrifying to think what a 15% PA mortgage rate would do to JAMS with a mortgage.
In 2007 Gordon Brown pledged 3 million new homes by 2020 and a target of 240,000 new homes per year. This has not been achieved in any year in the past decade, indeed there has been a shortfall of around 100,000 homes per year, which with simple arithmetic gives a shortage of around 1 million homes in the UK.
It is worth noting also of course that the population of England has gone up from under 49 M to over 53 M in the seventeen years since 2000.
This is not however the big story. If one focuses on Dwellings by Tenure in England since 2000 (Table 1) there are a number of issues:
- There has been a dramatic drop in Local Authority (council) housing from over 3 M homes in year 2000 to to 1.6 M in 2016. This is close to a factor of two.
- Social housing has increased by about 1 M dwellings taking up some but not all the slack from Local Authority housing.
- The number of privately owned homes fluctuates up and down, with no clear trend. I have done a simple analysis by fitting a linear trend line (figure 1) which shows if anything the number of owner occupied homes is decreasing slightly (by about 5,900 pa).
- The big story however is the massive increase in privately rented property. The numbers have increased from just over 2 M in 2000 to a little under 5 M in 2016. Of course not all new houses are bought by the private rental sector, much of the increase will be in purchasing existing property.
In summary the data shows clearly that any increase of housing stock in England since 2000 has not gone to owner occupiers but rather to the private rented sector. It is clear that Rentier Capitalism is alive and well in England.
Table 1 Dwellings by tenure in England
|Year||Owner Occupied||Privately rented||Social rented – Housing Association||Social rented – Local Authority|
Figure 1 Owner Occupied Dwellings England 2000-2016