Our prime ministers aren’t building houses – that’s why there’s a crisis

Cameron built the fewest houses of any leader since 1923

Image: Number 10

Home ownership in England has slumped to a 30-year low, a new report by the Resolution Foundation confirms today. From its 2003 peak of 71 per cent, home ownership has retreated as the country’s most prolific tenure, with 64 per cent of households in England now owning outright or with a mortgage.

These are levels of home ownership not seen since Margaret Thatcher’s Right to Buy council housing scheme shifted into top gear in 1986.

The housing and affordability crisis in London is well documented. But the Resolution Foundation reveals that cities in the Northern Powerhouse and Midlands Engine have experienced between 10 and 15 per cent falls in home ownership from their peak years of about a decade ago.

A review of home ownership affordability exposes why the tenure is out reach of the majority of earners, despite a range of subsidies put in place by Cameron-led governments since 2010.

The ratio of the median house price to earnings in England has increased from 3.6 to 7.6 over the last twenty years, and today is greater than at the high point of the housing boom in 2007.

In inner London, the average house price is now 13.4 times average income – up from 5.2 in 1997.

In some inner London boroughs the unaffordability of home ownership is even more pronounced – the average house price in Kensington and Chelsea is 39.7 times average earnings for the borough and in Westminster it is 24.2.

As the Resolution Foundation points out, the North and the Midlands are not immune from deepening affordability problems. Greater Manchester has an average house price to average earnings ratio of 5.2 compared with 2.8 back in 1997.

The West Midlands conurbation has seen the affordability ratio worsen from 3.0 to 5.4 over the same period.

The decline in home ownership tracks back to the long housing boom from the mid-1990s to 2007, with house-building failing to keep pace with demand, so rapidly inflating housing prices.

And subsequent poor construction performance post-2008, when the international financial crisis hit, and stagnant earnings, have stoked affordability problems in the home ownership sector.

Research by the Human City Institute has shown how a chronic lack of new housing supply has created the current housing crisis and contributed fundamentally to the unattainability of home ownership and its associated decline.

John Healey MP, former Housing and Shadow Housing Minister, and a key supporter of the save social housing campaign group SHOUT, has recently published figures showing the average number of homes built annually by prime ministers from Baldwin in 1919 to Cameron in 2015.

Cameron achieves the lowest average for almost a century with under 124,000 homes built yearly. This contrasts with almost 290,000 homes provided annually by prime ministers from Churchill to Callaghan. Even Thatcher achieved an average 191,000 in the 1990s.

Our research, illustrated in the chart above, builds on Healey’s by taking into account the growing national population between 1919 and 2015 and calculates the average prime ministerial house-building performance per 1,000 people. This shows an even more lamentable house-building performance in recent times.

Cameron achieved just 2.2 homes per 1,000 people in England and Wales whereas the annual achievement in the Churchill – Callaghan era averaged 5.9 to 7.5 homes. The chart illustrates that the last four prime ministers – Major, Blair, Brown and Cameron – all failed to achieve the number of new homes since Baldwin in 1923, and even fall short of Attlee’s feat in the wake of the Second World War.

The result is more young people pushed into an expensive and insecure private rented sector, increasingly controlled by buy-to-let landlords, with a resultant ballooning housing benefit bill and widening wealth gap with older home owners.

Kevin Gulliver – @kevingulliver – is Director of Birmingham-based research charity the Human City Institute, is former Chair of the Centre for Community Research, and part of the SHOUT save social housing campaign, but writes in a personal capacity.

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12 Responses to “Our prime ministers aren’t building houses – that’s why there’s a crisis”

  1. wg

    Labour flooded the country with immigration and now wonder why there are not enough houses.

    This sudden upsurge has left my city a congested, fearful, wasteland where it was once a beautiful and green city.

    Well done Labour.

  2. B. Brady

    We need a Land Revolution! …Crown lands need to be allocated and made available for purchase by British Citizens at a low affordable price….This will generate house building like we have never seen in this country…This will put power into the hands of we the people, and not the greedy, profiteering developers and bankers, who are keeping house prices ridiculously high…Access to an affordable building plot is a Human Right…We want it NOW!

  3. Peter Oldham

    Interesting! Since joining the “Common Market” (EU) house building has shown a steady decline no matter which party was in government.

  4. Joe Chapman

    Buildung houses is a short sighted and unsustainable answer to the problem. What we need is radical change, redistrbution of wealth, including land. Labour will not deliver that, because most of its councils are right wing neo liberal.

  5. CR

    The root cause of the housing problems is uncontrolled immigration

  6. Rob Alexander

    If there had been investment in infrastructure, including homes and transport, the immigration people have voted against would have been seen as opportunity, not threat. Visit other countries and see how they are building- we are not and have not. The referendum was lost because of Tory austerity.

  7. Michael WALKER

    I see posters above want to build houses anywhere and not where they might be wanted.. Crown Lands.

    Anyone fancy living in Scotland? Or Cornwall? I fancy a palace myself:-)

  8. David Davies

    Sell off all the council houses at a promise that they will be rebuilt out of the proceeds.

    Do no such thing.

    Allow BTL leeches to crowd out homebuyers from the market, by overbidding for available property.

    Saddle the youth with unrepayable levels of debt.

    What could possibly go wrong?

  9. ted francis

    Is there really a housing crisis because of immigration numbers? I’ve seen no authoritative stats to prove it. The affordable housing crisis, which also includes rented property, began with the selling off of council property and no replacement programme and as has just been said the invidious BTL regime. Its all been said a million times before but nothing has unfrozen each government’s caught-in-the-headlights posture.To start tackling the exorbitant price crisis start with Estate Agent legislation, banning the commission system. Introduce a private property profit levy, the proceeds from which go into a public house building programme. Peg prices at their previous penultimate buy/sell level. That should help to bring house prices down. All it takes is a little legislation and fingers in the ears to block out the stuck-pig squeals of all the vested interests.

  10. Imran Kahn

    Ted Francis. If immigration isn’t a factor in the housing crisis then we should be encouraging more of it surely?

  11. mel price

    House building increases inflation. More housing deflates the value of existing properties. If we can build semi detached we can build small modern cheap back to back houses as starter homes for childless couples, single people and newly weds trying to get on the property ladder

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