Politicians and industry know we need to build more homes. Why hasn’t it happened?

JAY ELWES ASSOCIATE EDITOR, PROSPECT AND COMMISSIONING EDITOR, THEARTICLE.COM

Britain doesn’t build enough homes. From that one fact, a long chain of consequences follows. For one thing, it means that homes in Britain are extremely expensive. According to the Office for National Statistics, the average salary in Britain in 2021 is £29,744. The average house price in the UK (as of March 2021) is £256,405 and prices have risen 10.2 per cent in the last 12 months. And if you want to settle in London, the average property price is now over half a million. No wonder so many people have chosen to move out.

Big prices mean big mortgages, taken out by the millions who are looking to climb what’s usually called the “housing ladder.” But the “ladder” metaphor, with its connotations of a consistent and inevitable upward advance, is deceptive. Most people who take out a mortgage are so burdened with debt they’ll spend the rest of their working life paying it off. Less “ladder,” more “merry-go-round.”

And these, of course, are the fortunate ones. High prices mean that many people are simply shut out of the property market. That is not only unfair, it is also absurd. Homes should not be a luxury. They are an essential. In the postwar period, the possibility of homeownership was within the grasp of the average worker. According to Nationwide, the average UK house price in 1952 was £1,891—at the time, the average annual wage was £481, giving a wage-to-house price ratio of around four. Nowadays, that ratio is over eight and a half. If you live in London, it’s almost 17.

Recent decades of surging house prices have skewed the housing problem significantly towards the young. Back in November 1996, a five-bedroom terraced house in Fulham, southwest London, could be bought for £143,500. Now, a house like that costs £1.3m. These sorts of increases not only shut younger buyers out of huge swathes of the capital and other desirable areas across the UK, they also create socio-economic bubbles. These clusters of high-end, expensive homes are snapped up by the successful, professional classes. As a result, the local schools find themselves with an intake of middle- and upper-middle class children from increasingly affluent backgrounds. The involvement of successful parents in the running of schools is one of the factors that drives their improvement. And so it is that more expensive house prices create social enclaves that span generations. These bubbles are sealed off from the rest by the enormous cost of buying in.