A recent analysis conducted by the Resolution Foundation has shed light on Britain’s housing situation, revealing it to offer the poorest value for money among advanced economies. This assessment is based on an examination of various housing metrics using international data. The findings highlight the severity of the UK’s housing crisis compared to other nations with similar economic development. Interestingly, many of these countries also grapple with their own housing challenges, underscoring the global nature of the issue.
The study underscores the need for a closer examination of Britain’s housing policies and practices to address the root causes of the housing crisis. By comparing data from various advanced economies, policymakers can gain valuable insights into effective strategies for improving housing affordability, quality, and accessibility. This analysis serves as a call to action for policymakers and stakeholders to collaborate on innovative solutions to ensure that housing in the UK meets the needs of its residents in a sustainable and equitable manner.
The report highlights that assessing housing costs based on the share of household income spent on housing is common practice. However, this method may not be ideal for international comparisons due to variations in the percentage of outright homeownership across countries. For instance, countries like Italy, Spain, and the UK have a higher proportion of outright owners (61%, 49%, and 36% respectively) compared to Germany and the Netherlands (26% and 9% respectively).
To facilitate international comparisons of housing costs, the analysis considers the market cost of housing by incorporating imputed rents. This involves estimating what homeowners would pay if they were to rent their homes at market rates. By examining this aspect, the analysis reveals significant variations in the market price of housing across different countries. Interestingly, the study finds that housing represents a larger share of consumption in the UK compared to most other advanced economies, second only to Finland.
The high housing costs in the UK could imply superior quality or larger homes, but the foundation contends otherwise, asserting that people pay more for less. According to the report, English residences offer less floor space per person compared to similar countries like the US (66 ms), Germany (46), France (43), and even Japan (40).
This data challenges the notion that the elevated costs are justified by better housing standards. Despite paying more, individuals in the UK receive less living space on average than their counterparts in other comparable nations.
The foundation highlights a stark reality: English homes offer less floor space on average compared to residences in New York City. This revelation underscores a concerning trend in the UK housing market. Despite similar overall consumption levels, Britons receive 24 percent less housing per person than Austrians and 22 percent less than Canadians, as revealed by the foundation’s latest report, released today.
Moreover, the age of the UK housing stock presents another challenge. It emerges as the oldest among European countries, with a notable proportion (38 percent) of homes built before 1946. This stark contrast is evident when comparing to Italy and Spain, where only 21 percent and 11 percent of homes, respectively, date back to the pre-war era. The age of these properties often correlates with inadequate insulation, leading to escalated energy expenses and an elevated risk of dampness, according to the Foundation’s findings.
The discrepancy in housing standards extends further, with the report shedding light on the disparity between the UK and its international counterparts. Notably, the UK lags behind in terms of both quantity and quality of housing compared to other advanced economies. This revelation challenges the notion that high housing costs in the UK reflect superior housing standards. Instead, it suggests that, despite paying more, residents receive less in terms of housing quality and space, further exacerbating the housing crisis gripping the nation.
The Foundation’s analysis underscores a concerning reality: the UK’s housing stock provides the poorest value for money among advanced economies. Comparatively, UK households shell out 57 percent more for equivalent (quality-adjusted) housing compared to their Austrian counterparts and 36 percent more than Canadian residents. This disparity extends to other nations grappling with housing crises, including New Zealand, Australia, and Ireland.
Moreover, the Foundation’s findings highlight the multifaceted challenges faced by UK households, including high costs, poor quality, and inadequate security within the housing sector. These issues are likely to take center stage in the upcoming election campaign, prompting political parties to engage in robust debates and propose viable solutions to address the pressing concerns affecting numerous households nationwide.
Adam Corlett, Principal Economist at the Resolution Foundation, emphasizes the significance of Britain’s housing crisis and its implications for policy-making. As the electorate demands effective strategies to mitigate the housing challenges, the forthcoming election campaign serves as a crucial platform for deliberating on reforms aimed at enhancing affordability, improving housing quality, and bolstering tenant security.
“Britain is one of many countries apparently in the midst of a housing crisis, and it can be difficult to separate rhetoric from reality. But by looking at housing costs, floorspace, and wider issues of quality, we find that the UK’s expensive, cramped and ageing housing stock offers the worst value for money of any advanced economy.
“Britain’s housing crisis is decades in the making, with successive governments failing to build enough new homes and modernise our existing stock. That now has to change.”
