Our shrinking houses

New-build houses in Britain are among the smallest in Europe. But that's not the real problem, says Merryn Somerset Webb.

How small is your house? My guess is you think it is too small. You probably also think it is very small relative to the houses people in other countries live in. If it's a new-build, you're probably right.

As Matthew Lynn notes, strict planning laws combined with some other factors (the difficulty developers have in financing infrastructure, for example) mean our new houses are among the smallest in the world, at an average of 76 sq m (818 sq ft). In Ireland, it's 88 sq m. Go to Spain, and it's 97 sq m. Cross to Denmark and you'll get an airy 137 sq m.

At first glance you will see another manifestation of the UK's great housing crisis. But it is more complicated than that. The size of households in the UK is falling fast. In 1961, an average of 3.1 people lived in every UK house. By last year, with 29% of houses occupied by singletons and 28% by child-free couples, that had fallen to just 2.3 people.

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What's more, the average UK house is clearly bigger than the average new-build. If you use the number Matthew gives for this 95.7 sq m things suddenly don't look so bad: everyone's got 41.6 sq m of space each.

Still, what we need are numbers we can compare across countries to see just how badly off we are. The best I can find come from the Royal Institution of Chartered Surveyors (RICS) and aren't particularly up to date (2002). But they give a sense of the problem with the idea that the UK offers much less living space than anywhere else in Europe.

On the RICS data, the average UK house (old and new) is 85.84 sq m. The average French house is only a bit bigger at 88.9 sq m, as is the average German house (87.88 sq m). The Spanish average is about the same size as the UK, and both the average Portuguese and Greek houses are rather smaller.

Look at space per person (dividing total floor space by average household size) and you find there isn't much difference. In the UK, we have 37.32 sq m each about the same as the Germans the Italians have 33.65 sq m, and the Spanish have 33 sq m.

Look at it like this and there isn't much to complain about. Our problem is not the size of our houses on average, it's the way we share them out too many older, single people in the bigger ones, and too many families in the smaller ones, something encouraged by our capital gains tax regime.

Everyone in the UK buys as big a house as possible and stays in it whether they need it or not, because it's the only way to make leveraged tax-free gains.

This is not to make light of Matthew's point. Our new houses are generally small and nasty in a way that new houses in the rest of Europe aren't houses are getting bigger pretty much everywhere except for here and in Sweden.

It's just to say that the problem is as much in the distribution of bigger, older houses as in the mean building size of new ones. Something for the new housing minister to think about.

Merryn Somerset Webb

Merryn Somerset Webb started her career in Tokyo at public broadcaster NHK before becoming a Japanese equity broker at what was then Warburgs. She went on to work at SBC and UBS without moving from her desk in Kamiyacho (it was the age of mergers).

After five years in Japan she returned to work in the UK at Paribas. This soon became BNP Paribas. Again, no desk move was required. On leaving the City, Merryn helped The Week magazine with its City pages before becoming the launch editor of MoneyWeek in 2000 and taking on columns first in the Sunday Times and then in 2009 in the Financial Times

Twenty years on, MoneyWeek is the best-selling financial magazine in the UK. Merryn was its Editor in Chief until 2022. She is now a senior columnist at Bloomberg and host of the Merryn Talks Money podcast -  but still writes for Moneyweek monthly. 

Merryn is also is a non executive director of two investment trusts – BlackRock Throgmorton, and the Murray Income Investment Trust.