Is the housing shortage caused by shrinking households?
The papers and TV news regularly feature reports on the lack of housing particularly noting the plight of first-time-buyers struggling to get onto the property ladder and those key workers living in areas of high property prices who are affected by the lack of affordable housing. Lynne McCaffrey, Head of Property reflects on a recent report looking at British households.
“The Centre for Economics and Business Research and Legal & General have produced this fascinating report which highlights a number of key influences in the UK property market. For example the number of people living in each British household now stands at 2.3 this year – in 1970 that figure was 3. Whilst that doesn’t sound a huge decrease when put into the context of the UK population that’s a significant shift.
“There are a few social trends driving this change – higher rates of divorce result in larger numbers of smaller family groups and our ageing population has resulted in growing numbers of elderly people living alone. Work scarcity has continued to provoke people to move to areas where work is more plentiful and this has had two impacts – in some cases people have moved alone, buying a house in a new area to start a new life whilst others have been buying a property for weekday occupation for themselves so as to avoid up-rooting their family.
“These social changes have come at a time when housebuilding is falling behind demand. Opinions vary as to the level of new homes the UK needs some claiming we need more that 230,000 new homes building each year whilst the housebuilders claim that delivering more than 180,000 new homes a year is unachievable under current market conditions citing skilled labour shortages as one of the major obstacles. Others point to a need for increased resources in local planning departments. The situation is exacerbated by the imbalance in property construction – only 41% of new homes constructed last year were for one or two bedroom properties, down from 51% in 1992.
“So whilst shrinking households are one of the causes of the current housing shortage there are other factors having a major impact on the situation. One thing’s for sure – property ownership remains the aspiration for the majority and when buying a house people are always keen to get moving as quickly as possible. In the current market where competition for houses is fierce then the need for urgency is greater than ever.”
Content correct at time of publication