1.2 million more dwellings than households – is that right?

The latest chapter of the Social Trends analysis produced by the statistician’s at ONS covers housing. It pulls together familiar data and will tell the cognoscenti little or nothing they don’t already know.

But interestingly you don’t have to pass the first graph before widely held assumptions are challenged.

It is taken as fact by the overwhelming proportion of politicians and housing professionals that there is a housing shortage.

Well here is Figure 1.

Pull the numbers apart and we find that in Great Britain there are about 1.2 million dwellings more than households, despite household size shrinking.

Pulling from other figures outside the document we have one home for every 4.81 inhabitants of Great Britain in 1901, one home for every 3.16 in 1961 and one home for every 2.28 in 2008.

That does rather beg the question: housing shortage, what housing shortage?

Now I support the view that we should build more homes. But am I definitely not in the camp of ignoring the facts while making the argument (outside of a testy pub rant that is).

It is essential if we are to have a satisfactory housing market and satisfactory homes to live in as a nation that we challenge cosy assumptions. They cloud sensible policy making.

So we must look at the need for excess housing and what is driving growth in the greater numbers of homes we have for the number of households.

Some homes will be holiday home businesses.

Meanwhile, some excess in housing is necessary if people are to have choice, that’s logical. Otherwise the last person to pick has what is left rather than a choice.

And some excess is inevitable if we are to have mobility without resorting to tents or hotel rooms.

So some overcapacity is good, as I convince myself when pondering my waist size while buying trousers these days.

But how much excess is reasonable and why has the excess been growing so fast? What, too, are the implications for the distribution of housing within the population?

One thought that came into my mind when looking at the graph was that perhaps there was an effect from increased wealth and income inequality, given that it is the better off that tend to buy homes.

So out of interest I put together a graph that plots the percentage of dwellings in Great Britain above the number of households against the house price earnings ratio (taken from the Nationwide’s figures) and the Gini coefficient (taken from the Institute of Fiscal Studies).

The Gini coefficient is one way to measure inequality and as we can see from the early 1980s onward we have become a less equal society. For the record I have taken the coefficient which excludes housing costs and multiplied it by 10 to fit the graph.

I have taken data points at broadly decade intervals in line with the Social Trends data. This deprives us of subtlety, but what is intriguing is that with the growth in income inequality we have seen a growth in the price of houses relative to earnings and the number of dwellings in excess of the number of households.

What is also interesting is that there was a rapid growth in the number of homes above the number of households through the 1960s and 1970s, presumably linked to the social and private house building boom of the 1960s and early 1970s.

Now I am not suggesting that wealth or income inequality is necessarily or solely the driver of high house prices and an increase in the number of homes we have above households. Nor am I suggesting it is necesssarily why we hold the apparently paradoxical belief that there is a housing shortage while we seem to have 1.2 million spare homes.

The point I am making is that we should not accept without question and thought cosy assumptions that end up becoming accepted truths – especially not when people’s lives and livelihoods are at stake.