We all knew the UK housing crisis was bad – but today, a report from business lobby group CBI has helpfully quantified exactly how bad. Each year, the housing shortage is costing British consumers – drumroll, please – £4bn.
Four billion pounds, every year.
This massive figure is mostly down to (sit down, this may come as a shock) house prices. Across the country, prices have risen 56 per cent since 2004. In London, they’ve risen 90 per cent. Here’s a chart from CBI’s “Homes for Growth” report with the depressing figures in full:
Unsurprisingly, then, £3.2bn of that £4bn total comes from housing costs like rent or mortgages; the other £770m is the cost of transport borne by people who can’t afford to live close to their work, school or amenities.
None of this is good news for the British economy. Companies need a mobile, flexible workforce, not one that has to travel 50 miles to work every day because they can’t afford to live in the city. Just as important is the opportunity cost: the £4bn spent on housing is £4bn that can’t then be saved or spent in other parts of the economy.
The CBI blames the UK’s property price inflation on a housing shortage. We’re just not building enough homes have to keep up with demand: in 2010, fewer houses were built in the UK than in any year since WW2. And today, the UK has the fastest growing population in Europe.
This chart shows the gap between housing demand and completed builds over the past two years:
The lobby group’s solution? Ten new towns and garden cities to be built by 2025, stamp duty reform, and a target of 240,000 new houses to be built a year. Katja Hall, the group’s Deputy Director-General, said:
“Addressing the chronic housing shortage should be near the top of every party’s to-do list…. Political parties of all colours have made the right noises on the need for more homes, but without serious action the ambition to own a home will become more and more out of reach to ordinary people.”
But, with a housing minister who doesn’t seem that keen on building any housing, it seems unlikely this wish list will come to anything.
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