|>>|| No. 59754
The Need for Housing
1. The UK has a housing crisis. Put simply there are too many people chasing too few homes. In 2004
the Barker Review estimated that 240,000 additional homes needed to be built in the UK every year to
cope with demand. However, in the last ten years an average of just 165,000 have been built (find the
latest statistics on house building here).
2. The House of Lords Select Committee on Economic Affairs has now concluded that 300,000 new homes
would be needed annually in the UK. The government has committed to building one million new homes
across the UK by 2020, which the House of Lords Committee said ‘will not be enough’.
What is driving demand for housing?
3. The Department for Communities and Local Government make projections about the future growth
in the number of households in England. Their latest statistics project that if net migration to England
was to continue at 233,000 a year (it is currently 300,000 and has averaged 208,000 in the last ten years),
then 240,000 new homes will be needed each year for the next 25 years to keep up with demand, 45% of
which will be due to future migration. We will therefore need to build one home every five minutes just
to house future migrants and their children.
4. However, these DCLG projections only account for the impact of future migration. The existing migrant
population - who number 8.4 million in England – will also be driving future household formation but
this has been misleadingly designated as ‘natural change’ among the existing population as a whole
rather than as also partly due to previous migration. (To read our paper on the impact of immigration on
housing demand in England see here)
5. The demand for housing is closely related to the number of households (a household can vary from
one person living alone to a family with children or a group of unrelated people sharing a common
space like a kitchen or living room). Household formation depends on changes in the population’s agestructure,
social changes including trends in cohabitation, marriage and divorce, and the birth and death
rates. It is also influenced by the availability and cost of housing. For much of the 20th century the
number of households rose faster than the population and the average household size fell. However,
recently average household size has changed very little so population growth is now the key factor
driving household growth (see here).
6. One way of measuring the impact of immigration on housing is to look at the additional number of
households formed that are headed by an immigrant. There is wide variation in the size of immigrant
households but, on average, household size tends to be greater amongst the non-UK born and they are
also more likely to live in overcrowded conditions. So, person for person, immigrants have required less
housing than those born in the UK.
7. However, official Labour Force Survey data shows that over the last ten years 90% of the additional
households created in England were headed by a person born outside the UK. That is 1.1 million
additional homes out of 1.2 million between 2005 and 2015. In London in the last ten years, all of the
additional households have been headed up by someone born overseas.
8. That is not to imply that most newly built housing is occupied by migrants, indeed many migrant
households move into existing urban areas. The majority of new migrants to the UK, live in the private
rented sector and that sector has grown as the migrant population has grown. Indeed in 2015 there were
2.2 million more households in private rented accommodation in England compared to 2000 and almost
half of all private rented households in England now have a non-UK born heads of household, compared
to one quarter in 2000. (Link to new paper)
9. Over time patterns of accommodation change and migrants who have been in the UK for a long time
are likely to have similar levels of home ownership to the UK born.
The impact of the housing shortage
10. The UK’s housing shortage has a huge impact on people’s lives. High housing costs in many parts of
the country take a large portion of their income. The English Housing Survey found that 43% of income
is spent on housing costs amongst those in the private rental market and for those living in London, the
average rent is over 70% of the main householder’s income.
11. For some young people the high cost of renting means that they have to spend longer living in house
shares or with their parents and some families are forced to live in overcrowded conditions or move away
from their local area to find suitable accommodation that they can afford.
12. Young people who are having to spend a significant proportion of their income on rent are finding
it more difficult to save for a deposit and for many young people high house prices are ruling out the
prospect of home ownership. The percentage of 25-34 year olds who own their own home, either
outright or with a mortgage has fallen from 59% in 2003/04 to around 38% in 2015/16. This fall mirrors
the reduction in the number of first time buyers in England. (Link to new paper). Home ownership
amongst all age groups is now at its lowest level since 1984 and has fallen from 68% in 2005 to 62% in
13. A recent survey conducted by the housing and homelessness charity Shelter found that 59% of 18-
44 year olds were expecting to have to put their life on hold in some way due to housing problems. This
includes one in five who were putting off having children or would in the future delay having children,
and one in six who had postponed marriage. (To see more results from this poll click here)
14. The high cost of living can also trap people in areas with low housing costs and fewer opportunities
by pricing them out of areas with higher housing costs.