What’s behind the spike?
Why are British house prices still so high, even in the wake of the worst financial crisis for generations? Housing bulls would have you believe it’s down to a shortage of property. After all, if there’s a physical shortage of houses, and a growing population, then prices are bound to stay high unless a huge number of new houses are built fast. Given our planning laws and generally conservative attitude towards development, that seems unlikely. So it’s a great sales pitch for property.
The trouble is, it’s not true. One of the most interesting titbits from the 2011 census was highlighted this week by Andrew Lilico on the ConservativeHome blog. As Lilico notes, between 1981 and the 1991 census, the number of surplus ‘dwellings’ (properties) compared to households (one person or group of people living together) dwindled as fewer houses were built. Further estimates in the late 1990s suggested the situation had worsened.
In fact there seemed to be a significant shortage of ‘dwellings’ in London and the southeast – in other words, two or more ‘household’ units were cramming into one dwelling. Around the same time, the property bubble kicked off. “Thus was born the notion that there was a ‘housing shortage’.”
• Read the full editor’s letter here: What’s behind the spike?