Is the housing market fostering inequality between the generations and across society? Kevin Gulliver gives an evidence based analysis of the current situation.
Kevin Gulliver is the director of Birmingham-based research charity the Human City Institute and chair of the Centre for Community Research; he is writing in a personal capacity
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.
34 Responses to “UK housing market is an engine of inequality”
colin falconer
#ukhousing market is engine of inequality: @leftfootfwd blog by @kevingulliver http://bit.ly/jcMSc4 > liked focus on assets for the poorest
Lara Oyedele
RT@jrf_uk JRF #UKhousing market is an engine of inequality http://t.co/UIGeLR0 via @leftfootfwd
Steve Twomlow
UK House prices in the midlands have fallen back from their 2007/8 peak by less than 20% – back to the levels they were at in 2005/6. In the US there are examples of house values that have dropped by 66% from their 2007 peak. And our housing markets volatile ?
Dank Castle
Here in Australia, several trends over past years related to household income and household formation have worked together to excessively and unsustainably force up property prices to unfair levels. These factors are combined with unchecked commodification of shelter for the population. This is caused by misguided governments who omit to regulate house prices, while unfairly allowing over-leveraged bidders to force up housing costs so they, the government, can benefit from vast streams of land tax, stamp duty, and council rates revenue. Australia’s dangerously unregulated property environment includes many unfair elements that are described well in these blogs on Australian housing affordability…..
http://s4.zetaboards.com/Australian_Property/pages/blogs
Sadly the truth in Australia is that every spare dollar of household income is spent on overpriced housing and capitalized into ever increasing house prices as young families battle for decent shelter while speculators unfairly hoard the available housing stock! Quite unfair really.
Dank Castle
AustralianPropertyForum.com Housing Affordability Blog
http://australianpropertyforum.com/blog/main/3271816