UK needs more houses

Household in UK increasing

The UK does need to build new housing for the new households being created.

 In some countries the years prior to 2007 saw a huge increase in home building. But the UK even in the boom years there was not enough development to cover the increase in houses required.

 Households required

The chart below shows the number of new houses required in England by 2033. Most of the increase is driven by increases in population, and as many of those who will be establishing households are already born. There may be trends towards large households or large scale migration.

Source: UK National Statistics

This means we need about 2.4 million new houses a decade, or 240,000 houses per year between 2008 and 2018. We are already nearly half way through that period so the question is how are we doing? The answer is pretty badly.

Homes built to 2012 and required 'till 2018

My figures are based on the NHBC homebuilding figures. I have grossed up by 20% as they are responsible for approximately 80% of the housebuilding activity and I have annualised Q1 figures. I have also assumed that the new houses are built in the correct parts of the UK and that existing houses are not demolished.

My thoughts

It seems that demographics have mandated we need a lot of new houses, but there seems to be too little building. This is odd as with so much unemployment there are plenty of idle builders sat around, or people unemployed who could be building houses. By the time we start building it may well be the case that unemployment is lower and wages will be higher.  There is quite a risk in waiting and it seems little to be gained.

It is not that the government is unaware of this. They believe the reason for the lack of supply of housing is that people cannot afford to buy housing because they cannot access credit. Increasing the credit will increase the demand for housing and this will encourage supply. The UK faced a huge housing problem in the 1940s as a result of Hitler's bombs. The solution then was a huge increase in social housing. Interesting this is no longer on the political agenda. Infrastructure spending tends to be on transport rather than housing. It does seem to me that  government could build more housing now, even if the plan is ultimately to sell it off.