By Andrew Carter, Chief Executive of Centre for Cities
Open a national newspaper on any day of the week, and more likely than not, you’ll find a story on Britain’s housing crisis. From concerns about housing affordability to debates about homelessness and the quality of social housing (especially in the wake of the Grenfell disaster), housing is increasingly becoming one of the most pressing political issues of our age.
However, one crucial factor which is often overlooked in these debates concerns the geography of this problem. There isn’t actually a national housing crisis – this is specifically a problem for cities in the South of England, where economic buoyancy has resulted in demand for housing that far outstrips supply.
This point is illustrated in Cities Outlook 2018, the Centre for Cities’ annual health check on UK city economies. It shows that the most unaffordable cities in the UK (as measured by the average cost of a house compared to the average wages paid to a worker in a year) are located exclusively in the South of England – from London and nearby cities such as Oxford and Brighton, to places further west such as Exeter.
In all these places, average house prices are more than 10 times higher than average annual wages (in contrast to places like Barnsley and Hull, where house prices are 4-5 times higher).
This is not to say that cities in other parts of the country do not have housing challenges – but that these are more related to quality of existing housing stock, rather than the need for significant increases in the number of homes available.
The Government is not blind to the geography of this problem, and in his Budget speech, the Chancellor Philip Hammond emphasised the need to build homes in London and the Greater South East in particular. Moreover, he also signalled that tackling the housing crisis is a domestic policy priority for the Government, pledging to ensure that 300,000 new homes will be built each year.
The problem is that current Government housing policy fails to reflect the geographical aspect of the crisis, and is actually exacerbating the problem by increasing demand without addressing supply (an issue acknowledged by Housing Secretary Sajid Javid).
Take, for example, the cuts to stamp duty announced at the November 2017 Budget. This will help some first-time buyers get on the housing ladder, but there is little evidence to suggest that it will have any impact on getting more homes built. The same problems apply to the £10bn additional investment for the Help-to-Buy scheme announced at the last Tory party conference.
Moreover, stamp duty is a progressive tax which generates £11bn in revenue each year, and so these cuts will do little to help people struggling to afford decent housing in our most in-demand cities.
To build the homes that people living in southern cities need, we need to make more land available in these places. The answer typically put forward by all politicians to this problem is that we should build more on brownfield land. And this is true. Centre for Cities research shows that there is capacity for around 425,000 houses on available brownfield sites in ten of the UK’s most unaffordable cities.
However, given that around 300,000 new homes are needed each year for the foreseeable future, these sites will not help cities meet housing demand for very long. Moreover, brownfield land is expensive and difficult to repurpose for land, so getting those 425,000 potential new homes built will be extremely difficult. Finally, a focus on brownfield land puts at risk the playing fields, cultural venues and commercial space which exist alongside brownfield sites in our most successful cities – and which make them good places to live and work in in the first place.
As such, brownfield is part of the solution – but only a small part. Instead policy makers need to consider all options available for new homes – including building on the green belt. Releasing just 5 percent of the green belt close to existing infrastructure around the ten of the least affordable cities would unlock land for 1.4 million suburban homes in the cities where they are needed most.
Building on the greenbelt is politically contentious, which is why politicians from all parties have sidestepped this issue. However, it will be a crucial part of addressing the housing needs of people living in Britain’s most in-demand cities.
To tackle the housing crisis, policy makers must first recognise the geography of the UK’s housing crisis, and then start to make the difficult decisions required to ensure that quality, affordable homes are built where they are most needed.