An Englishman’s home is his castle. This idea, nay ideal, is woven into the soul of the country. Owning one’s home has been the lofty pursuit of the British peoples since the ebbing of the manorial system began during the intra-Gallic (arguably also inter-Gallic) Hundred Years’ War, when land became an aspiration one could acquire with the fruits of one’s abilities rather than from an inheritance after a lucky roll of the genetic die. Being landed was so respected that it was, throughout the evolution of Britain’s parliamentary democracy, a prerequisite for being an elector to the House of Commons until the year 1918. After 1945, His Majesty King George VI’s governments set about a mammoth housebuilding programme from which millions of new houses were built. In 1975 as fresh leader of the Conservative party, a budding Mrs. Thatcher cried victory as she declared Great Britain a property-owning democracy. You, my dear pensive reader, may be asking ‘What, pray tell, went wrong?’
First, some recent history. The housing bubble at the start of the millennium, whose popping precipitated the Great Recession, saw the average house price in England reach a zenith of £194,764 in September of 2007. Yet nearly fourteen years later, in March 2021, HM Land Registry recorded an average sale price of £274,615. These numbers alone do not illustrate the forces at play in the housing market and do not show that the market necessarily possesses bubbly qualities. To glean the truth, one should consider a house price to earnings ratio. Using data from Nationwide, we can see that this ratio has been relatively stable in the whole country since the bubble burst in 2007/8, but this has not held true for the capital city and indeed the Home Counties. This ratio is especially stark in illustrating geographical differences in England. From 2014 to 2019, the average northern Englishman need only keep all their salary for about three years in a row to purchase a house outright while a denizen of the capital would need to maintain such thrifty living for at least nine years on the trot during the same period. London’s current housing market has far surpassed the measly limits set by the housing bubble of the noughties.
Onto supply. We all know that prices rise when demand exceeds supply. Each year hundreds of thousands of new houses are built in England, however the quantities of dwellings sprouting and germinating from the soil is far fewer today than between 1945 and the 1970s. Most of this decrease is explained by the sharp drop in housebuilding paid for by local authorities. As Victorian slums had finally been cleared only to make way for dens of lawlessness, the governments of the 1970s and thereafter saw fit to reduce funding for housebuilding by local authorities. This has never been reversed.
Notwithstanding, the private sector has, since the accession of Her Majesty Queen Elizabeth II, built a hundred thousand new homes every year but seldom more than a hundred and fifty thousand. Why, when local authorities’ building dwindled, did the private sector not step in to fill the gap? For a number of reasons, chief of which is being granted liberty to build on land. From dithering over the green belt vs. brownfield land to obtaining planning permission and being thwarted by politically astute and erudite NIMBYs, there are many cumbersome hoops the construction sector must navigate – often taking years from querying a site before a single scarlet polyhedron has touched grass. The green belt which surrounds England’s dense cities are comprised of many individual plots of greenfield land – eulogised as England’s green and pleasant land in Blake’s Jerusalem if you will. It is land that is highly sought after by construction companies directly, and Generation Rent indirectly, as it offers greatest flexibility for development. But, as such virgin land is very dear and precious, the local burgesses assemble into Residents’ Associations and many declare resolutely that nary a blade of grass shall be trampled nor unearthed on their steely watch. Further, if and when land is finally available, a profit maximising business is incentivised to build to the upper end of what the market demands. Insodoing, they will utilise their scarce land for fewer expensive houses, with high profit margins per property, rather than many cheap ones which are less profit efficient – thus lowering the total number of houses built which has minimal impact on the supply curve.
On the other hand, financial instruments to aid purchases of your first home provide plentiful lubrication to the housing sector. The Bank of England’s official Bank Rate is 0.1%, granting retail banks ample access to near limitless supplies of cheap credit and offering the cheapest mortgages to customers this country has ever seen. If this were not enough, HM Government proffers Help to Buy equity loans of 5-40% of the value of the house depending on its price and location in addition to other policies.
It was a typically dour Scotsman, Carlyle, who dubbed economics a ‘dismal science’. As people create demand for property in and round the ancient city of London coupled with the ruthless exploitation of politics to restrict supply, it is kismet that price rises. While this much is true, housing costs in the rest of the country are stable. Not only that but, there is a plethora of tools available to give prospective buyers a leg-up on the housing ladder. We as a people must be prepared to live within our means in order to own a house and that must include moving northwards, where our earnings amount to orders of magnitude in higher purchasing power. To sum, the housing market is not broken – it is working as intended.
 Not In My Backyard: People opposed to local development