I was once listening to a young woman give a talk at a pub, and the topic, naturally, turned to housing. She told us she had given up on looking for a house – she tried, but it has proven impossible to find a place for which she would be given a mortgage and where she actually wants to live.
That young woman was the Minister for Levelling Up, Dehenna Davison MP. If even members of the Government are not able to secure a mortgage for their first home, what hope do us, average Joes, have?
In the 1980s, it would have taken a typical couple in their late twenties around three years to save for an average-sized deposit. Today, it would take nineteen. Millennials are half as likely to own a home at the age of thirty as Baby Boomers were, and the situation will likely be even worse for Gen Z. Most – 68% of all renters, in fact – have given up on any hope of ever being able to afford a home. The situation for young people trying to get onto the housing ladder is dire.
It was good to hear, then, Michael Gove saying in the speech he gave earlier this week that the Government will be “prioritising first-time buyers for homes over those with multiple properties, over those seeking to convert family homes into holiday lets, and over speculative buyers.” The numbers involved are huge. According to my estimations based on Resolution Foundation research and the UK House Price Index, the UK is host to around £1.3 trillion’s worth of additional property wealth: a sixth of all of the UK’s property wealth. To put this into context, this volume of property is worth over five million times more than the average home bought by the average first-time buyer.
Over 10% of the UK population own multiple properties. A significant contributor are short term rentals. There were around 4.5 million in the UK as of 2020 – around 19% of the UK’s housing stock. Gove has already, laudably, been trying to bring some of them back into the hands of locals who have been prevented from stepping onto the housing ladder by requiring that said rentals acquire planning permission.
It was encouraging to hear that Gove wants to see more homes built where first-time buyers want to live. The overarching message of his speech was densification – filling in and expanding existing settlements, such as London, Manchester and Cambridge. The average age in the UK’s major urban areas is just under 38 years. In rural areas, it is over 44 years. Moreover, at the time of writing this article, on the portal graduate-jobs.com, over half of all the graduate jobs advertised are either in London, Manchester or Birmingham – all large urban centres. Young people struggling to get onto the housing ladder have their jobs and friends largely in urban areas, and not on the green belt, so this is where they want to live.
The problem is that this is not enough.
First, research consistently shows that there simply is not enough space in any of the cities Gove mentions to achieve the kind of housebuilding numbers he aspires to. According to the Centre for Policy Studies, even if every piece of brownfield was developed for housing, only 1.1 million homes would be provided; enough for less than four years of sustainable housing development, and nowhere near the 4.3 million new homes that the Centre for Cities estimates
We need to meet housing demand. A part of the solution to fixing the housing crisis must lie in expanding settlements outwards, as well as densifying them. Even if first-time buyers do not want to live outside urban centres, new homes built there would incentivise older people to move and free up their properties located where younger people need them.
Second, even if the above were not the case, and millions of new homes could be built through densification alone, doing so would take decades – but the housing crisis is here with us now. By the time this increase in supply would effect housing affordability, millennials will have retired, including those who never managed to get onto the housing ladder.
In truth, even if there was enough supply-side expansion immediately, prices would still remain out-of-reach for too many people in the short term. And even in the long term, the Government must ensure that those new homes are not simply snapped up by rich landlords, speculators and holiday-makers. To alleviate this, the Government ought to work on a new demand-side measure targeting housing affordability for first-time buyers, but avoiding the past mistakes of Help to Buy.
But perhaps there is some hope. The careful listener will have picked up on Gove’s brief salute to Help to Buy, followed by the promise that “we will go further later this year.” Let us wait and see. The Secretary of State for Levelling Up took a step in the right direction, yet more still needs to be done.
Bartek Staniszewsk is a Researcher at Bright Blue. Views expressed in this article are those of the author, not necessarily those of Bright Blue. [Image: Ricahrd Bell]
