The collapse in homeownership is a disaster for social cohesion
HOMEOWNERSHIP has just fallen to a 25-year low, which means that Britain’s once-vaunted ownership society is in deep trouble. This is very bad news indeed. It is vital, for the sake of social and economic cohesion, that as many people as possible are able to own property; the only form of capitalism that is politically sustainable is that which is based on capital and assets, including shares and homes, being owned by the many, not just the few.
What is most depressing is that much of the progress of the past few decades is being undone. The proportion of all households in owner occupation increased steadily from 56.6 per cent in 1980 to a peak of 70.9 per cent in 2003. Since then, however, there has been a terrifying decline to the current 65.2 per cent, the lowest since 1987. Over a third of the 14.3 per cent rise during the Thatcher/Major/early Blair years has been reversed during the late Blair/Brown/Cameron years. This 5.7 point slide camouflages an even steeper decline in London, where more people have been permanently priced out. It is not just in relative terms that homeownership has been falling: it is also dropping in absolute terms, peaking at 14.791m in 2006 and falling to 14.337m in 2012-13.
There is a simple reason for that: far too few homes are being built as a result of political failure, and therefore prices have gone up compared to average earnings, all over the UK but especially in and around London. The number of households is growing faster than the number of new homes; just 14.2 per cent of total currently existing private sector homes were built in the 22 years from 1990-2012, against 19.6 per cent in the 15 years from 1965-80, for example. The 1980s was also much better, as were just about all other periods: 8.4 per cent of private sector homes were built between 1981 and 1990; and a remarkable 22.2 per cent of private homes were built before 1919.
Britain’s housing stock is too old and inefficient, and the past quarter of a century has seen far too few homes added. It’s a national scandal; politicians and nimbies deserve to be ashamed of themselves for selfishly colluding in this way, and ensuring that far too little land has been released for building over the past 10-15 years. A growing chunk of the public, and especially younger people, feel as if they will never have the opportunity to own a stake in our society.
The other big change is that private renting has now overtaken social renting for the first time, which is a good thing. There were 22.0m households in England last year: 18 per cent (4.0m) were private renters and 17 per cent (3.7m) were social renters (down from 31 per cent in 1980). Many people enjoy renting, and do it out of choice. But it is also more unstable than owning: the mean length of residence for owner occupiers is 17.3 years, for social renters 11.3 years and for private renters 3.8 years. This can be bad news for families.
The UK needs house prices to fall compared with average earnings to allow more people to be able to afford to buy – but it also needs a better mix of private renting, with more large professional landlords entering the market and offering much longer tenancies and greater certainty. That model works well in Germany, where large institutions own and rent out tens of thousands of homes.
But the primary solution to our housing crisis, as this column has long argued, is to build, build and build more. We can’t afford to wait.
BABY BOOM
It usually takes nine months from conception to birth. Yes, I know you knew, dear readers, but that fact somehow escaped me yesterday. I referred to the fact that there were 884,748 conceptions in 2012, but somehow forgot that most of the babies were born in 2013. The number of births rose slightly in 2012, rather than fell slightly, as I intimated. Hey-ho.
[email protected]
Follow me on Twitter: @allisterheath