The United Kingdom has always been a dream destination for most. However, contrary to the popular belief that the English land is an enviable place to reside in, in terms of housing, its reality is far from stable. Even though we are almost at the end of the year, even with just two months to go, the housing situation in the country is going from bad to worse. The latest concern that has been flagged is that amongst nations accepted as developed, it is the most challenging location to secure housing. To put it in simpler terms, the situation is disastrous.
A grim situation
The UK is identified to be currently facing the most severe housing shortage among developed nations. On top of that, a considerably high percentage of the population in the nation resides in substandard housing compared to the European Union’s average.
The Home Builders Federation (HBF), which represents private sale construction companies, conducted a study revealing that the country has the lowest ratio of vacant homes per person when compared to the 38 nations in the Organisation for Economic Co-operation and Development (OECD). This includes most EU countries, the United States, Japan, and Australia. This data was showcased prior to the upcoming Labour party conference, where housebuilders reiterated their call to ease planning restrictions to expedite construction.
The study also mentioned that approximately 25% of private renters in the UK are victims of high housing costs, with more than 40% of their income going towards housing expenses. This when contrasted with the 9% in France and 5% in Germany (based on OECD data) is a value that illustrates the predicament that house owners in the UK are in.
The situation in the UK is already in an extremely problematic situation. However as HBF explained, things could get worse. This is because the shortage of available properties and obstacles to construction are pushing the UK housing situation deeper into crisis. For them to reach international benchmarks by 2030, it would necessitate an unprecedented level of annual house construction. Which is unrealistic and undoable.
As mentioned in Sky News, Stewart Baseley, the executive chairman of the Home Builders Federation, stated that there is widespread recognition that the state of housing in the UK is in a critical condition. However, once the research pulled the numbers in and provided a stark illustration of the extent to which they are lagging behind their global counterparts, people realised that it was much worse than they had assumed. The ongoing issue of housing undersupply has led to an ugly situation for people who need a decent home.
The inability to afford housing
Between 2004 and 2021, the rate of home ownership in the UK declined by 6%, dropping from 71% to 65%. During that same time frame, France saw a nearly 10% increase in home ownership, and the Netherlands experienced a 15% rise. This is mainly because the UK has one of the most expensive housing markets, with the average property price being more than seven times the average salary.
Even when compared to countries known for their pricey housing markets, the UK fares poorly. For instance, Denmark, known for its expensive and competitive property market, witnessed a 12% growth in the house price-to-income ratio between 2004 and 2021. However, in England and Wales, this ratio surged by 37% during the same period. What is even more concerning is that despite the people having to pay a cumbersome fee, the quality of homes in the UK is notably subpar.
Dire conditions of properties
Paying a high price for shelter is partially justifiable if the house is in superior condition. But being coerced to pay an exorbitant price for houses that do not even meet the bare minimum standards should be considered a crime. Not only does the UK have a dearth of housing and unaffordable housing but it also has homes which are in the worst conditions of all European countries. To put it into numbers, 15% of the housing does not fall within required quality standards, which is an indication that the UK is doing much worse in comparison to Eastern European nations that are considered to be ‘less’ wealthy.
The abysmal condition of the houses in the UK can be mainly attributed to the country having some of the oldest housing stock in the developed world. Despite a significant increase in house construction in the UK over the past decade, it’s worth noting that only a mere 7% of British homes were constructed after 2001. This figure is substantially lower when compared to countries like Spain, where 18.5% of homes were built after that year, and Portugal, with 16%.
HBF’s study also stated that the UK has the least number of houses built since 1980 in comparison to other countries such as Spain, France, Portugal, Greece, Romania, Bulgaria and Hungary. For example, Hungary, with one of the lowest average annual incomes in Europe and a GDP 17 times smaller than the UK, has a housing stock that is more contemporary than British homes. About half of the homes in Hungary were constructed after 1971, whereas in the UK, only about a third of the housing stock falls into that category.
In terms of constructing new houses, The Daily Brit captures Clive Holland’s; presenter at Fix Radio (the UK’s only national radio station dedicated to tradespeople) insight. According to how he frames the current state of the UK’s construction industry, he says that the government had an ambitious goal of constructing 300,000 houses annually. Even before the COVID pandemic, this was undoubtedly a challenging task for more reasons than one. Post-Brexit, many support teams returned to their home countries, exacerbating the shortage of skilled workers in the industry. The construction sector already faced a scarcity of tradespeople. During the pandemic, nearly everyone, except for emergency services and the construction industry, essentially came to a halt. Approximately 80% of the population was placed on furlough and similar programmes.
Meeting the demand for 300,000 houses was always going to be a formidable task. Now, the situation has become even more complex as many housebuilders have temporarily halted work on numerous sites because they are unable to sell properties due to the rising interest rates. Typically, many sites across the country used to witness buyers purchasing properties off-plan without physically inspecting the houses. But now the situation has altered.
The overall picture of the housing market in the UK is quite unpleasant, to say the least. Therefore, the country requires an intervention that improves the quality of homes, substantially. This should be considered as a wake-up call that pushes respective parties to be on their feet and act immediately to prevent the UK housing market from plummeting to a point of no return.
(Sandunlekha Ekanayake)