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  • Writer's pictureSteffan Willis

Econ Insights: What actually is housing?

Updated: May 2, 2023

In this series, we look at interesting data sets to uncover hidden insights. In this article, we ask whether the view of housing in the UK is feeding the housing crisis.

It is generally accepted that Britain, and particularly London, has a housing crisis. Whilst the median household income of a first-time buyer in London is £70,000, the median household makes just £39,100. House prices and home ownership are a national obsession - a scan through the archives of any British newspaper will reveal countless articles charting their trajectory and chronicling the travails of young professionals unable to purchase their first home. Far less attention is paid to those for whom owning their own home is now an impossibility.

The solution seems obvious: build more homes. All the major political parties are backing plans to build significant numbers and there is growing recognition on both left and right that the state may need to play a more active role in housing provision through a new wave of social housing construction.

But whilst policies which promote house building are welcome, they are by no means sufficient to solve the housing crisis. The problem with the prevailing media and political discourse stems from the lack of a comprehensive conceptual understanding of housing and the role it plays in shaping people’s economic and social decisions, resulting in a focus that is almost entirely based on affordability and quantitative targets.

In 1976, John Turner[1], an English architect who had spent over a decade working in Latin America, published a book titled ‘Housing by People’, in which he documented the housing stories of people living in informal settlements. In it, he argued that for housing to be properly understood, it needs to be seen as an ongoing process occurring throughout people’s lives as their circumstances and needs evolve. The housing needs of an individual age 25 will be very different from those of that same individual when they are 45 with teenage children. Housing, he argued, is the process of balancing the various functions and roles that a home can provide against the resources available to that household.

At its most basic level, housing provides space, comfort and amenities in which lives can be lived. As people have children and grow older, their need for space and comfort tend to increase and they tend to sacrifice flexibility in favour of higher levels of security. Tenure can be thought of as the balance between this flexibility and security. One of the areas of greatest disfunction in the UK housing market is the lack of choice when it comes to tenure, with the options effectively limited to a choice between short-term renting and home ownership. Access to social housing is severely restricted and available only to those in the most significant need.

The location of a home determines the employment opportunities, social networks and services which can be accessed. The Oxford Consultants for Social Inclusion (OCSI) recently published a new index of ‘left-behind’ places defined by a lack of civic assets, connectedness and engaged communities. Many such places are on the outskirts of thriving cities such as Leeds and Birmingham, but lack good transport connections to the city centre. Such places have significantly higher levels of unemployment and economic inactivity.

All of the above factors need to be weighed against a households’ income and the financial value and liquidity of any asset gained. As the percentage of income spent on housing rises, the amount available for consumption, saving or investment in other areas such as education falls. In London, private renters on average spend 49% of their gross monthly income on rent[2].

What implications does this perspective on housing have for public policy? London and the South-East need more homes to meet the needs of a growing population. It is common to hear calls for development to be permitted on areas of the green belt surrounding the city and there are undoubtedly areas of the green belt that are either non-sensical, or not very green, that would be good sites for building large numbers of new homes. A determined government could relatively easily construct several hundred thousand homes, as was seen in the post-war period. However, housing is more than houses. For these new developments to succeed, they need to be integrated into the city whilst also having their own social and economic infrastructure. They should, to quote Aneurin Bevan, be a “living tapestry” which are socially and culturally diverse, rather than isolated estates to house low-income families unable to afford life in London proper.

Housing development at Barking Riverside
Housing development at Barking Riverside © Thomas Nugent (cc-by-sa/2.0)

Whilst transport infrastructure is important, a train station is not a community meeting point. Housing and the physical environment play an important role in developing and sustaining communities - are there opportunities for people to meet? Or are people forced to use their cars access to local services?

This idea of housing also has important implications for housing tenure. Long-term tenancies, as are common in much of continental Europe, could provide the security needed by families with children and older generations. A more accessible social housing system which provides income-linked affordable housing for a much large share of the population would address the extreme housing poverty experienced by many of those in the private rental sector and place downward pressure on rents. Opportunities for community land trusts and self-build sites may be the right solution for others. Above all, government policy should facilitate experimentation, recognizing that a one-size fits all approach is not sufficient to meet peoples’ diverse needs.

[1] Turner, John F. C. Housing by people: towards autonomy in building environments. (London: Marion Boyars, 1976)

[2] Office for National Statistics. Housing summary measures analysis: 2016. (2016)

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