Monday, 21 November 2011INDEX

House building
In 1980 when Maggie Thatcher was rolling back the public sector and was about to begin selling off council housing at bargain basement prices, the private sector embarked on building 131,990 while the public sector notched up 110,010 housing starts. The balance was roughly 55% to 45%.

The UK housing stock is about 25 million so total starts of 242,000 meant the average new property had to last a shade more than 103 years. Build 242,000 houses every year for 103 years and you get 25 million.

But the design life of much new housing is only 30 years. This is not just a theoretical constraint. Much 1960s housing has already been demolished.

One of the motivations for cutting back public sector housing was to liberate the private sector: to let the free market provide the needs of the country.

In reality house building has been declining.

In 2008 there were only 182,820 housing starts. This is a quite remarkable reduction. A third more housing was built in 1980 than in 2008.

In general the private sector has built more houses than it did in 1980 (in 2008 private starts stood at 150,720) but the additional units were nothing like enough to make up for the decline in public sector building brought about by Thatcherism.

At the same time the population has been climbing quite rapidly, it hit 62,262,000 in mid 2010, compared to 56,330,000 in 1980, an increase of more than ten per cent.

In 2003 the Barker Review of Housing Supply calculated that 39,000 extra houses needed to be built each year just to accommodate population growth and changing patterns of household formation. (

A paper published by the Centre for Economic Policy Research (UK Household Formation: Nuclear Fission?) pointed out: "There have been dramatic changes in patterns of marriage and childbearing behaviour in the United Kingdom in the past 15 years. Divorce rates have risen, the propensity of unmarried couples to 'cohabit' has increased, and the proportion of babies born outside marriage has risen, from 8% to 19%."

If the nuclear family really is melting down then there will be a need for extra housing units even if the population stays the same.

The press often talks about a population time bomb caused by baby boomers reaching pensionable age and putting unacceptable pressure on the social fabric of our society. In reality this does not seem to be happening (for various reasons). If the proportion of pensioners was too high you'd expect births to decline. The opposite is happening. In 2010 live births reached 797,000, the highest since 1991.

More births, of course, means more demand for housing both now and in future years.

Government statistics reveal that things are much worse in 2010/11 (April 2010-March 2011) with total housing starts running at 131,040 of which 99,050 are private sector. At a rate of 131,000 houses built each year, the average new property will have to last 190 years.

Well some may, but to return to that Barker report house prices have risen much faster in Britain than elsewhere in Europe, suggesting there is already considerable over demand (or to put it another way, scarcity).

source:e Office for National Statistics (
source: (Communities and Local Government *Based on Experian forecast for Great Britain)

Posted by Jonathan Brind at 15:11
Monday, 21 November 2011INDEX