WHAT IS THE HOUSING CRISIS ANYWAY?
Updated: Oct 18, 2021
It’s come to my attention that I don’t really understand the meaning of the Housing Crisis. Like everyone else who has worked in the property sector, or really just picked up a newspaper in the last ten years, I know roughly that there’s a problem with housing; that there’s not enough of it and that we must act! I’ve even had fairly fluent conversations with my contemporaries where we’ve mused on the Housing Crisis and what must be done.
The trouble is, I’ve been getting it wrong. And I suspect many others have too.
As an aspiring generation of housing professionals, we; my peers and I, need to take a broader view of the challenges of housing availability. We can’t just look at the problems effecting our own bubble. If we’re going to make meaningful changes in the years ahead, we have to understand the problem now.
So, I’ve been labouring under the assumption that the housing crisis is about there not being enough houses for all the people. It was my belief, that if we shook everyone out of their house and lined up households and properties, side by side, there would be considerably more of one than the other. Sadly, this is not the extent of the problem. If it were then things would be a lot easier to solve.
It may surprise you, or not, to learn that there are millions of acres of land already owned by major housebuilders and local authorities that could theoretically all be developed into housing over the next year, thereby creating hundreds of thousands of new properties that didn’t exist before. So why isn’t this done? In the first instance because the building industry has it’s own supply problems. You’d simply run out of basic building materials very quickly if all projects were undertaken concurrently. The second problem is a market demand. There have to be enough households wanting and able to buy/rent and move to those properties, mostly within the area they currently live. Most of the housing demand exists in densely populated cities but most of the land does not. So, although housing stock is part of the problem, it’s by no means the only problem.
At the sharp end of the stick, the housing crisis is deeply troubling. There is a homeless problem in parts of the country. Major towns and cities with hundreds of people sleeping rough or in temporary accommodation; those who have an immediate need for permanent housing. This is also true of families who are living under assured tenancies but in less-than-acceptable conditions. Homes which don’t meet decent homes standards, homes which are too small for the family units living in them, communities that have reputations of squalor which define the lives of its residents. These are a very real part of the housing crisis.
Different parts of the country have differing supply. We can roughly track the desirability and demand for housing based on the pricing of property within locales; London and the South East being the most expensive areas of the country to live. There are parts of the North of England where property is comparatively cheap and so, for those in dire need, one strategy is to migrate the homeless out of the most desirable areas into cheaper ones. But this is an objectionable practice, sort of like the opposite of what Americans call White Flight. At a certain point, you have to examine your own politics and decide whether its more important to simply fill houses with people, no matter how distasteful the methods might be.
The softer side of the housing crisis, which has been widely reported on, is the inability for young people to buy property until they are well into their adult life. A couple, jointly earning £50K a year would struggle to buy property from a standing start in the higher priced half of the country. It is not a reality for most people unless they’re extremely diligent savers or have assistance from their parents. This is the reality of housing price inflation massively outstripping wage inflation.
Because the conservative government places home ownership right at the top of the pile of economic indicators for an individual and for the country at large, they have legislated towards access strategies to make it possible for individuals to ‘get on the ladder’. Shared ownership, leasehold reform and more recently, investing in the North are just some of the ways the government is trying to assist buyers across the country. Although none of this will help those who are struggling with the cost of social rentals.
What I’ve learned is that property stock is important. There is existing stock which is not currently fit for purpose. Anything being currently built has to be eco-minded and future proofed so that we don’t repeat the problems of the past. And there is land and a healthy industry ready to meet the growing challenge of building more homes.
But another slant on the problem is how to access these properties. Turning every home upside down and shuffling the pack is an interesting thought experiment but in reality there’s a lot of bureaucracy and socio-political obstacles between he-without-a-home and she-with-a-home-to-offer.