From Post-War Boom to Today's Bust: Exploring the Roots of the UK Housing Crisis
The Centre for Cities think tank found, in its report published last year, that Britain has a backlog of 4.3 million homes. They’re missing from the national housing market because they simply were never built.
What happened?
The answer is far from simple and not something one blog post can fully encapsulate. But if we (collectively) are going to solve the housing crisis, it seems only sensible to take stock on what led us down this path. So, read on for a potted history on the key moments that have brought us to where we are today.
A post-war building boom
The fact that England has not succeeded in building the much-championed annual target of 300,000 homes since 1969 indicates how big an achievement it was. It didn’t happen out of the blue. It was the result of public intervention through policies to boost growth following the Second World War, fuelled by an unwavering conviction in the importance of housing delivery.
Delivery wasn’t equally attributed to both the public and private sector: the post war housing boom was primarily driven by public housebuilding.
Our leaders held a strong conviction that this, combined with other ambitious projects like the establishment of the National Health Service, was the right approach to restore prosperity and quality of life.
Graph showing house building by tenure, 1946-2016. Source: 50 Years of the English Housing Survey, MHCGL
Thatcher’s Right to Buy programme
The fact that it was the government driving our post-war housebuilding surge is significant. Because in 1979 the government introduced a new power that would fundamentally alter the picture.
The policy giving tenants the right to buy their home at a reduced rate was undoubtedly life changing. Between 1980 and 1995 more than two million homes were sold under the Right to Buy scheme.
However, the rate of public sector building wasn’t enough to replenish the supply being lost through the scheme. The overall stock of local authority-owned housing dropped significantly, exacerbating an already emerging housing shortage. The total number of new homes being built had dramatically reduced by the 1990s – coinciding with the early 1990s housing crash.
The overall stock of local authority-owned housing has dropped significantly since the Right-to-Buy scheme.
Housing bubble (and burst)
Recovery from the 1990s housing crash was helped by a rapid rise in house prices – and the limited housing supply only served to increase this trend. House price rises outstripped wage rises, hampering affordability.
The intertwined causes of the global financial crisis are probably even more complicated than that of the UK housing crisis, but pent up demand combined with poor lending practices ultimately led to its inevitable burst in 2007.
A moratorium on new housing
Development activity progressed at pace during the “bubble” which led to regional planning guidance for the north west proposing in 2006 that house building be restricted to ensure the right balance between growth objectives and environmental protections. Supply in Cheshire East, for example, was limited to 700 homes a year.
The industry at the time warned of its consequences on affordability, as did the NW Regional Assembly. But the restrictions were not lifted until May 2008, in response to the North West Regional Strategy.
While restrictions have been lifted for almost two decades, minimum housing targets are sometimes still seen as maximums, and the process of setting targets has become a lot more political, meaning that supply is often outstripped by need.
The view east across Salford and Manchester reveals the scale of transformation in recent years.
The scrapping of regional housing targets
In 2010, the coalition government removed the nation’s regional tier of spatial planning. The North West’s Regional Spatial Strategy was abolished in 2013.
The significance for the housing crisis?
These documents played a vital role in outlining how many homes area local authority area must plan for.
Without regional housing targets, local authorities have had to grapple with numerous different methodologies for calculating housing need and be subjected to more challenge from those that don’t agree.
The Home Builders Federation reported last year that planning approvals for new homes are at record lows since its records began shortly before the scrapping of regional housebuilding figures.
Smaller households and other changes
The more subtle, less news headline-grabbing demographic shifts can’t be understated either.
The 2017 English Housing Survey confirms that the average household size has gone down since the 1960s, from 3.0 people per household to 2.4 in 2015-16 meaning we need more houses for the same number of people.
There are a whole host of reasons for this – such as an increased life expectancy, and lifestyle and societal changes. Housing policies have shifted to accommodate the greater diversity in households and lifestyles. We also have a better understanding of how to meet accessibility needs in new housing. It’s undoubtedly a good shift, but one that also increases the complexity of how to solve the crisis.
Reedham House, providing city centre living as part of a mixed-use scheme off Deansgate, Manchester
Big problems require a collective effort
Deputy PM Angela Rayner said at the recent Social Housing Conference that she wants to work with the industry to deliver housing.
That’s good news, because complex problems need to be tackled from all angles. As the saying goes, many hands make light work.
The government has made a big promise – 1.5 million homes by the end of this parliament is no mean feat. And the Office for Budget Responsibility forecasts that the government will miss its target.
Will it, like so many previous governments, lean too heavily on the private sector to deliver? Or will it do more than make big promises?
One thing is obvious – the government could build houses itself. It’s something that Place North West’s Subplot doesn’t think is likely.
But why not?
Manchester and Salford are forging ahead with their own ambitions, setting up development arms to crank up delivery. Collaboration is key, and Rayner’s speech to those at the sharp end said all the right things. Now we need the government to follow up with action and support the public sector to build and build some more, in collaboration and cooperation with the private sector.
We’re working with plenty of developers who are rolling up their sleeves to get on and deliver. We’re excited to not only watch this space, but to, as Rayner says, “go on with it together”.
If you’re looking for expert planning advice for your next development proposal, get in touch with Euan Kellie Property Solutions.
