Is the housing market fostering inequality between the generations and across society? Kevin Gulliver gives an evidence based analysis of the current situation.
The UK housing system, which was a significant driver of the UK’s slide into recession in 2008, is now recognised as an “engine of inequality”.
The latest evidence is presented by the Joseph Rowntree Foundation Housing Market Taskforce, which shows how the UK’s persistently volatile home ownership market distorts the housing system overall, instills damaging cycles of boom and bust and underpins the growth in wealth inequalities.
There appears to be little upside to housing market volatility in the UK; despite falling house prices since the recession began in early 2008, this is not feeding into improving affordability because wages are stagnant or declining. The government’s measure of housing affordability – the ratio of median house price to median income – fell from 7.2 in 2007 to 6.3 in 2009, but has since increased to 7.0 while most house price indices, including those published by the Nationwide and Halifax, indicate sliding house prices.
Stagnating housing supply in all tenures is an associated by-product of housing market volatility, the outcome of which is ballooning social housing waiting lists and homelessness, so storing-up housing problems for the future.
Professor Mark Stephens, the chief author of the ‘Tackling Housing Market Volatility in the UK’ report, published on May 17, commented that “ownership is being turned into an engine of inequality between generations as the young pay for the wealth generation of older people”.
Forthcoming research by the Human City Institute (HCI) underscores how inequality is embedded in tenure patterns in the UK; home owners have an average of £90,000 in equity whereas social housing tenants have £400 in savings on average and two fifths have no assets at all.
Alongside increasing the overall housing supply then, realising an asset-owning democracy irrespective of tenure should be central to a future, progressive housing policy. HCI recommends helping tenants build assets by setting-up asset accounts. The creation of a Social Investment Bank, controlled by a Tenants Mutual, to fund social housing and community infrastructure investment, would hold asset accounts for all tenants, operating like the Children’s Mutual.
The strategy would not only provide new homes and regenerate neighbourhoods but would encourage saving among disadvantaged communities, narrow the wealth divide between home owners and tenants, support the creation of a ‘Big Society’ for real and aid national economic recovery through increasing capital investment and employment.Like this article? Sign up to Left Foot Forward's weekday email for the latest progressive news and comment - and support campaigning journalism by making a donation today.
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