The UK doesn’t have a housing shortage
We don't have a housing shortage in the UK, we just don't have enough of the right houses in the right places, says Merryn somerset Webb.
Do we have a housing supply problem in the UK? Your automatic answer to the question will probably be yes'. After all, if we didn't have a shortage of houses, house prices wouldn't be as high as they are.
But look closely at the numbers in the latest English Housing Survey and you will see that it isn't really so. (This is a fantastically detailed report if you are interested in housing in the UK it is really worth spending some time on.)
On page 28, the survey considers the extent of overcrowding in English houses. Its conclusion is that there is very little. Some 3% of households live in overcrowded conditions, but 37% had at least two spare rooms, and were classified as "underoccupying". Another 34% weren't classified as officially underoccupying, but still had one spare room.
The upshot is that nearly 70% of households in the UK have at least one bedroom more than they need (or use). So we have less a shortage of floor space in the UK than a (presumably generational, and so short term) misallocation of the floor space we already have.
Capital Economics picked up the story in a note out earlier this week. It notes that from 2004 to 2014, the number of households in the UK rose by an average of 170,000 a year, but the number of dwellings in the UK increased by some 200,000 a year. That suggests a rise in the number of "apparently surplus homes" to around 1.3 million.
This is not to suggest for a second that all is well in the housing market it isn't. The problem is perhaps not so much a housing shortage, as a shortage of the right kind of houses in the right kind of places. It is also a shortage of the finance the young need to buy those houses because of the competition from buy to let investors, or the tougher mortgage environment since the financial crisis.