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Government / Local politics

The fall in home ownership is not just a southern problem

The latest instalment of our series, in which we use the Centre for Cities’ data tools to crunch some of the numbers on Britain’s cities. 

We talk a lot about the house prices in this country. Once upon a time, we used to talk about how brilliant high house prices were; but at some point it’s started to dawn that high house prices serve mainly to transfer money to the old and rich from the young and poor, and these days, we’re more likely to talk about how terrible they are.

But still, there’s sometimes a tendency to think that it’s fundamentally just a London, or at least, a southern problem. Sure, London house prices are crazy, the thinking runs: but there are plenty of other places you can still afford to buy. What are these kids whining about?

Anyway, it’s bollocks.

To explain why, let’s start with a map. The housing affordability ratio is the value of the average home and the average pay packet. Historically, it’s generally hovered at around 4, which is good because four times salary is the maximum multiple of your salary that banks generally think is a good idea to led you as a mortgage.

Here’s the housing affordability ratio in 62 British cities in 2016:

Even the cheapest cities are now above 4. A significant number are way, way above 4. That doesn’t mean housing is completely out of reach, of course: people buy in couples; and first-time buyers are probably not buying the ‘average’ house, but a smaller, cheaper property. Nonetheless, this map suggests that even affordable cities are not in fact that affordable.

That said, the situation clearly is much worse in the south. Get above that Bristol-Wash line, and there are, I think, only three cities in the darker colours (a ratio of 7.7 or above): Cardiff, York and Edinburgh.

So why is the idea that house price are a southern problem nonsense? Here’s a chart of how the affordability ratio has changed over the last 10 years. It’s risen in 51 cities, and fallen in only 11.

Click to expand.

In other words, it’s getting worse almost everywhere.

And yet, it’s still risen most strikingly in the cities in the south east. So to really make my case we need another metric.

Here’s one more map. This one shows the change in the percentage of “households renting privately or living rent-free” between 2001 and 2011. That sounds more complicated than it actually is: it basically just means households living in someone else’s private property. In principle, there could be vast numbers of people living at their nan’s or something, but in practice this is almost certainly a measure of the private rental sector (PRS).

The first thing you notice: the PRS has increased in size in literally every city. The smallest increase was in Barnsley, where it changed by 4.2 per cent, from 10.1 to 14.3. At the other end of the scale s Slough, where it increased by over 13 points, from 12.1 per cent to over 25 per cent. That’s a significant shift in the local tenure mix, and likely reflects both the town’s position in the London commuter belt, and the rise of the buy-to-let landlord class.

We can put the change more baldly. In 2001, there were 21 cities where less than 10 per cent of households were renting, and just three where it was more than 20 per cent. Ten years later, literally nowhere had less than 10 per cent of households renting – the lowest was Basildon, at 11.1. Meanwhile, 21 cities were at over 20. One, Oxford, was at over 30.

Still, that was six years ago, so I’m sure things will have improved by now, right?

[Brief pause for hollow laughter.]

 This is not new information, of course. In 2016 the Resolution Foundation put out a report showing how home ownership rates had changed. It showed that they’d fallen pretty much everywhere:

Click to expand.

The other side of the coin was that private renting has soared:

Click to expand.

In all sorts of places that people who can’t afford London are patronisingly told to move to, housing has become more expensive, and people have got stuck renting.

The message is, I hope, clear. Housing has become less affordable almost everywhere. Yes, the situation is worst in the south; but we shouldn’t let this obscure the fact home ownership, something that Britain’s politicians still claim to support, is now in national crisis.

Jonn Elledge is the editor of CityMetric. He is on Twitter as @jonnelledge and also has a Facebook page now for some reason. 

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