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Britain’s Housing Crisis

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Britain’s Housing Crisis

Homeowners in the U.K. are addicted to the shortage that drives up their property values. July 3, 2019
Economy, finance, and budgets

In 1951, Britain faced a housing crisis: not enough dwellings had been built to replace those destroyed by German bombs during World War II, partly because the Labour government’s restrictive system of urban planning had caused land and house prices to soar. Frustrated by this housing shortage, voters elected a Conservative government, under the leadership of Winston Churchill, that promised to make “housing a priority second only to national defense.” It was not clear whether Britain, on the verge of bankruptcy, could sustain a large increase in the rate of housebuilding. Nonetheless, the Conservatives promised to increase the number of houses built from 200,000 per year to at least 300,000.

Today, Britain faces a similarly severe housing shortage. The average price of a house has grown from £4,500 in 1970 to £226,800 today. In locales like London and Oxford, the average house, priced at more than £450,000, costs about 15 times the average wage. The young and the poor are priced out of homeownership. The most vulnerable are pushed into substandard accommodation, or, in the worst-case scenario, fall behind entirely and join the ever-growing ranks of homeless that shame Britain’s cities.

After taking office in 1951, Churchill’s government poured resources into housing and built 300,000 homes in nine months. Succeeding Churchill in 1955, Anthony Eden would be mainly known for his role in the Suez crisis, but under his leadership the Conservative Party also adopted the goal of a “property-owning democracy.” Increasing the number of homeowners became party policy, and it was continued by his successors, especially Margaret Thatcher, who began the process of selling Britain’s public-housing stock to its occupants.

As homeowners became the majority in Britain during the 1970s and 1980s, though, a strong political incentive emerged to ensure house-price inflation. High housing prices, once a sign of policy failure, became politically desirable. Local government bowed to NIMBY-ist demands to block new construction. No new towns were founded after the 1970s, and new public-housing construction had ceased by the 1980s. The government focused instead on tightening planning restrictions, making housebuilding impossible in much of the country.

The inevitable result of this constriction—an increasing scarcity of housing and spiraling prices—creates an existential crisis for today’s Conservatives. Property ownership is a core principle of Conservative ideology, and homeowners tend to vote Conservative. Yet homeownership among the young has collapsed. In the last election, these dispossessed young people turned to the hard-left Labour opposition. According to current polling, only 16 percent of voters under 35 would consider voting Conservative in the next election. If Conservatives are to appeal to the young, they must act to make housing affordable again.

Outgoing Prime Minister Theresa May has ignored the problem and allowed the crisis to fester. To salvage the Conservatives’ electoral prospects, the party’s next leader must institute planning reform and build more housing. The current leadership contenders don’t look promising in this regard. The frontrunner, Boris Johnson, has said nothing of substance on housing. Other candidates have only vaguely mentioned building more.

Tentative signs of change are emerging from within the party, however. Liz Truss, a minister widely regarded as a potential candidate for the Chancellor of the Exchequer, has advocated building 1 million new houses by removing planning restrictions that ban them on the edge of Britain’s cities. Sam Gyimah, an earlier leadership contender, pushed for an innovative plan that would allow individual streets, with a 66 percent voting majority, to let homeowners adopt a design code and construct apartments up to six stories high.

Britain’s Conservative Party of the 1950s backed an ambitious housing program that transformed the lives of millions. Now it stands at a crossroads. It can pander to the speculative interests of its homeowning membership and continue the restrictive-housing policies that have characterized the last 50 years, or it can reaffirm its vision of a property-owning democracy and once again make decent housing accessible to all. The Conservative Party’s future depends on which choice it makes.

Photo: tlnors/iStock

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