Housing Crisis what Crisis?

There cannot be a crisis because if there was we would be doing something different because that is what a crisis demands.

The UK has a manufactured housing shortage. Building houses caused it. Building more houses won’t solve it. This is because unlike Europe and other advanced nations the UK to all extents and purposes exclusively builds low rise car dependent houses colloquially known as “single family homes”. Built exclusively for the ambulant car owning sector of the population. It is a narrow housing offer based on a post war Boomer demand that is now over. However sufficient demand exists as much of our existing 26M houses is blocked by ageing Boomers with no realistic option to move somewhere more appropriate and stay within their community.

Some Background

Demographics, technology and the desire/ need for non car dependent lifestyle is ignored by UK politicians and developers alike. In Europe apartments make up 40 -60% of homes. It is probably no accident that the countries now struggling the most are those with a similar car-based low rise housing model. US, Canada, Australia and New Zealand. Countries wedded to the idea of the shortcake house with a lawn back and front.

It should not be a surprise that advanced states such as Germany, New Zealand and California are squeezing out houses and in Germany even considering banning them. Yet in the UK we trumpet and pursue this form of housing seemingly happy to be the world’s worst outlier in terms of housing. No state is as bad as the UK. No state so self-disillusioned to believe that its housing offer is the right one. No state happier pouring mindless volumes of concrete into the ground. No state placing ever greater demands on the future generation when its then smaller tax base will struggle even more than it does today. It is not as if we don’t have a choice. We do but seemingly don’t care about the future just today. Politicians gullibly support national house builders and fail to ask them why we have ended up where we have.

With a new government seemingly devoted to nett zero we have now arrived at The UK Housing Paradox.

“Pursuing Nett Zero whilst choosing to build Europe’s least sustainable housing (2x the EU average embodied carbon) that maximises embodied and operational carbon, transport poverty and car ownership.”

If there wasn’t choice maybe there could be some justification but there is and there isn’t.

Houses (Single Family Units)

Houses are expensive and even the UK’s smallest and cheapest is expensive compared to an apartment not withstanding that every house requires a piece of road in front of it. The UK ones are appallingly expensive, appallingly small and of equally appalling quality.

Apartment blocks need much less infrastructure in terms of highway, services, drains than houses. It is little wonder that not only are UK houses more expensive they have 2X the embodied carbon of the average EU Home. Houses generate more CO2 than apartments as the graph below shows.

What is clear that whilst other countries developed and broadened their housing offer the UK housing offer remained with a few noticeable city exceptions at 2 story’s. Medium rise (5 – 10 story) housing makes up between 40-60% of European countries housing offer. Affordable housing where a car was not necessary to live there. If you can afford a car you dont need affordable housing. A client recently noted that it was easy to spot UK affordable homes as they were the ones with new or expensive cars on the driveways.

Historically UK the housing model was largely the invention of London’s railway companies who invented the suburb. Expanses of low-density low-rise identikit houses. The result is that London has a population density less than half that of Paris. It was a model followed post WW2 and suited the Boomer generation and did not require skill or planning do deliver it and most importantly the least working capital. It fitted the British anti investment mentality. The pattern was set for the problem we have today.

Why didn’t it change?

About 40 years ago a property developer and fellow college student explained that what the UK builds is the most profitable for the developer (why would you build something that wasn’t?). Even a terrace is avoided.

The reasons are simply and solely for the benefit of the developer.

  • It requires the least amount of working capital to develop a site. Apartment block and terraces needed to be finished before sales are completed. A house requires far less money before the investment is recovered.
  • Production of houses can be adjusted to suit changing market conditions. The procurement system allows work to be stopped and started as required.
  • Sites need to last 3-5 years whilst the next one is brought online; the sales/build rate is throttled by price adjustment to ensure that presence is continually maintained.
  • It is a low-tech winning formula that makes money.
  • There is almost no product liability associated with individual houses.

The result is houses. Lots of houses and little else. A sea of houses best summed up by an Italian colleague who on first seeing a UK housing estate remarked. “so many buildings so few people”.  Houses are built only for profit and a narrow customer band. Developers are simply mining a diminishing market leaving people trapped in the houses they have previousl built over the last generation or two. It is little wonder that housing developments that offer nothing for the local population  are so ardently resisted.

Two graphics below that both compare the UK with Europe illustrate the problem.

The first is from the Financial Times using ONS data on housing.

The one below the FT graphic is from the 2020 BRE report on UK housing stock https://files.bregroup.com/bretrust/The-Housing-Stock-of-the-United-Kingdom_Report_BRE-Trust.pdf section 5

The simple fact is that Europe has a wider housing offer with a lower financial entry level that is cheaper, faster and more sustainable to build. It is not a difficult correlation to make that countries with a higher proportion of apartments have less of a housing shortage. Our “only houses” offer is the problem. Building more of a failed solution is not going to fix the shortage.

Instead, we Brits satisfy “The definition of insanity is doing the same experiment and expecting different results.” ― Albert Einstein where we continue to perpetuate the construction of expensive carbon max (2X European average) pokiest housing where you have to own a car to live there.

The consequence of the narrow UK housing offer is that

  1. We have a shortage of affordable housing. It is madness to build affordable housing that still requires the occupant to commit 25% of their gross income to owning a car. Affordable cars that with will disappear with the last petrol and diesel cars (circa 2040) a mere 15 years away.
  2. It encourages house blocking compared to first world countries like Europe where there are generational options through life. There is no obvious progression from house to non-car dependent spacious apartment. We need housing close to established transport and amenity hubs and where no new infrastructure is required. Reusing existing embodied carbon economically and climate wise is the obvious best option. Yet we build the opposite. We could do it but we choose not to because those solutions rightly dont provide the maximum profits.
  3. The idiocy of the UK solution is the constant need to build schools as the older population blocks housing in school catchments. Converted schools litter the countryside.
  4. The average UK house has 1.2 cars per household. About 10T of embodied carbon plus operational carbon per house.
  5. The need for avoidable roads. Roads that use oil-based binders to create the surface. There is no credible alternative yet in sight. Will we return to cobbled roads and pavements?
  6. Income that could be diverted to jobs, diet, a healthy lifestyle and maintaining the economy of our high streets is instead used to pay for power, car insurance and loans. As an example, the cost of running a UK car is around £4K per annum, £5k before tax. If 1M non car dependent homes were built this would potentially release £5B a year into local economies notwithstanding the reduced demand on the NHS that a better lifestyle and greater disposable income would bring.

Houses won’t solve the housing problem because

  • Changing demographics, old people don’t drive or do stairs.
  • People want or can only afford car free lives.
  • Nimbyism. They meet planning resistance because nobody sees the benefit. It just more of the same.
  • Housing estates require new roads and infrastructure before house construction can start.

A thought:

The UK has 26M largely car dependent houses. Many of those built after WW2 and before 1976 are low quality and vulnerable to climate change. Between 1946 and 1979, a total of 5,804,150 houses were built in the UK.

Cornish Type 1 – worth keeping? No.

Observe the sagging ridge lines and know about the shallow foundations and well documented floor defects of these houses and bungalows and we know they are well past their design lives. The original TRADA roofs designed for light clay tiles are simply not up to the addition of PV (solar panels and insulation) let alone retiled with concrete tiles. A perverse action undertaken by many authorites where perfectly good clay tiles are replaced with concrete tiles. The recovered clay tiles then recycled to new expensive 3 and 4 bed houses.

It is irrational to try and improve such old buildings. The argument for improvement rather than a wider holistic consideration of housing in the move to nett zero seems vested in self-interests. Academic support of improvement of the existing housing stock ensures the perpetuation of the greenfield development model. We apply ridiculous values to the minimal embodied carbon of these houses and bungalows whilst building carbon intensive roads and bridges and massive concrete foundations under houses whilst the superstructures decrease in weight.

What these old buildings do have is roads and infrastructure. Usually within 1 or 2 km of the nearest amenity and transport hub. Built and ready to go. These houses and bungalows represent land that could be rapidly exploited. Require little planning effort and exploit the changing trends of demographics and society. 

No complicated 106 agreements needed when the development consists of 4 or 5 properties assembled by the owners. 5 homes become 30 in 6 months. Why the owners? Because with £5.5T about to move generations as the Boomers die out why not harness that money with an inheritance tax concession that gives the whole country a stake in the solution rather than housebuilders shareholders.

How many homes do we need?

The UK estimates that we need 300,000 homes a year. That is 3M for the next 10 years.

https://www.gov.uk/government/publications/new-homes-fact-sheet-1-the-need-for-homes/fact-sheet-1-the-need-for-homes

Climate Migration

In addition to our normal housing demand, we might expect to see a further 30M MENA climate migrants (400M are running out of food water there) come to the UK. In order to house our population, we probably need around 15M homes. 30 to 40% wont drive.

Personal Transport

As we become too old and too poor to drive options like Zoox autonomous cars will become the affordable pay as you go transport of choice. It will drive the change that should already be happening.

https://zoox.com

Nimby verses Yimby

This apparent conflict is simply the result of the narrow UK housing offer.

There are two misconceptions in this artifical war.

1) A bunch of old people hold up the provision of new homes is perhaps the greatest misrepresentation of the housing industry. It is simply not true. The houses the Yimbys want and need already exist. What doesn’t exist is the route for the older parts of our society to get out of them and make them available whilst remaining in their communities.

2) Developers are some sort of benevolent altruistic organisations trying to solve the housing shortage. They are not. The shortage of affordable housing has been manufactured by the UK industry in order to maximise demand for the most profitable product – the 3 and 4 bedroom house.

The trick to freeing up housing in a community is not to build for the young but for the older increasing segment of society and those who would live car free lifestyles. The migration of the house blockers would provide the homes the Yimbys want.

What developers get from this conflict is to build more unnecessary but profitable 3 and 4 bed houses with government clearing away dissenters.

Rural Housing

There can be nothing more entitled than the demand for rural housing.

In the UK there is almost no need for anyone to live in the country. Across Europe we have seen the countryside empty. Not so the UK where it is nothing but a lifestyle choice; one that is subsidised by the urban population many of who are less well off than those that now live in the countryside. A situation that has reversed in the last 50 years due to the availability cheap of fuel and cars. A situation coming to an end and time for the countryside to return to its industrial agricultural use and become once again somewhere to escape from rather than a theme park to escape to.

Why subsidised? So called rural dwellers pay the same for utilities, water, they drive farther and have greater operational carbon footprints. How is it possible that a rubbish bin costs the same to empty in a village than a city estate? It is not possible.

Not only is rural housing environmentally and carbon wise the worst housing solution but Governments that seeks nett zero support this worst housing of all with additional financial support. Rural Housing maximises embodied, operational carbon and transport poverty. It seems to have missed the policy makers attention that universal car ownership will fall dramatically and many lifestyles dependent on cheap cars will no longer be viable. Politicians need to travel beyond the M25 occasionally.

A solution

Most countries dont see houses as a solution and neither should we. We need to stop building houses, increase the density of our population and not continue to build what amounts to some form of future open prison as demographics, migration and decreasing car ownership reshapes society.

https://www.refire-online.com/markets/single-family-homes-are-they-on-the-way-out

Replacing 3M of our substandard houses each with 6 apartments would generate the housing we need. Avoid 3M upgrade costs and create +15M new homes. This would save around 23,000 Km of new roads. 36M Tons of embodied carbon. It would create a fair and more inclusive society, yet no politician seems able to grasp simple demographics. 

UK Housing is not fit for the future.

The Assumption

There is a famous saying “Never ASSUME, because when you ASSUME, you make an ass of you and me.” Today there seems to be an assumption that the near future will look the same as the recent past. Electric vehicles will simply replace petrol and diesel ones and life will carry on as before. It is an assumption that is about to make an ass out of all of us. If nothing else the last 15 months of living with Covid-19 has shown us how quickly things can change when it’s necessary.

Current UK housing assumes car ownership. Today to own or occupy a house you need to own or have access to a car. This is especially true as our ever-spreading sprawling housing estates move us ever more distant from the facilities we need for everyday life. This is an assumption that does not stand up to examination because three things are now driving change that will see car ownership plummet and with it the desirability of estate and rural living.

1. Our Ageing Population

The Office of National Statistics estimates that over the next 50 years another 12.5m people will be over 65. This will reduce the number of drivers / car owners

UK housing is simply not suitable to grow old in. The UK has some of the smallest homes in the world. There is no room to fall or live with a wheelchair. As more boomers consider downsizing they will come to the conclusion that the new houses on offer isn’t a viable option for an ageing population. Consider how that small compact en-suite becomes a death trap as you move into old age or become in-firmed. The next time you sit on the toilet ask yourself “if you collapsed could someone get into to help you?”. Could a carer help you? The answer is invariably No. Inward opening doors will kill you. Check out if installing a stair lift is a viable option to delay your incarceration in the prison of your children’s choice.

2. Climate Change

Decarbonisation of the economy will reduce car ownership because

The end of new petrol and diesel cars (2030) will see demand for fuel decline. This decline will cause the cost of fuel to go up as refining of hydrocarbons needs volume to be profitable. Availability will go down as multiple fuel stations have insufficient throughput to survive; many are already more convenience store than petrol station. It will simple become too expensive to run the last traditional car that will probably have all but disappeared from our roads by 2045. The average lifespan of a UK car is 15 years.

We have all seen that new EV’s aren’t cheap. The battery is the expensive bit and at present lasts about 10 years (no doubt they will last longer as technology improves). Today a ten  or even a fifteen year old car provides an economic and viable transport option for many people. In the future that affordable option will not exist as the cost of replacing the EV’s battery is almost the same as a new car. Low-income households running multiple older cars will simple not be able to afford to rely on the continuing availability of a steady stream of affordable used cars. Transport poverty will now drive the choice of homes we buy.  

3. AI technologies

In the coming decade(s) AI technologies will take many of the jobs of those of working age. Autonomous trucks don’t just replace drivers but reduce the number of trucks by around 40% as they will now run 24 a day and not on the drivers legal hours. These trucks don’t need truck stops for food and rest. All those support jobs will go. Similar job loses can be expected in the legal, medical and construction industries. The resulting drop in household and UK PLC incomes as well as fewer commuters as people increasingly work from home we will see car ownership and the number of new cars decline significantly.

Self-driving AI cars that can be rented by the hour will provide a halfway house between  car and no car. Call the car and it will turn up and take you to your destination. It’s a Pay as you Go solution and when compared to the annual cost of around £5k to run a small car you can do a lot of trips for £5K. Car ownership will plummet

Conclusion

There is no doubt that climate change, demographics and technology will bring to an end the traditional British housing estate not because people won’t want them. As a viable living space they will simply be increasingly socially and economically unaffordable.

Tipping Point

There is a tipping point coming where multiple elements of our society will find themselves living in the wrong place, the wrong house and without accessible affordable transport. Too far from a bus route. Too old to drive and personal cars too expensive with the limited disposable income we will be left with few uncomfortable options;

Own the sort of EV’s that dominates China, a car little bigger than a large mobility scooter.

Electric vechicle
yellow Smart car

Live in increasing isolation where leaving the house becomes an increasing rare treat. Only Amazon and your food delivery company will know you are alive. Your house will have become unsaleable as all those groups with transport poverty realise that your private house is just not worth it.

Or find a solution

The Solution

The UK is addicted to low rise housing and has demonised apartments whist accepting ever smaller houses. It’s no different than chocolate bars where the price remains constant but the product continues to get smaller. Admitting the situation is the first stage of recovery to any addiction. Shrinking houses have barely improved in 40 years. In comparison simply look at a 40 year old car and today’s offer from a car manufacturer. The difference is stark, not so UK housing.

Recognising the inadequacy of the UK housing offer and understanding the new drivers is the first stage of delivering the change needed to meet the challenges we face.

Affordability

Affordability will no longer be just about the cost of the house and most other costs being equal but the cost of living at your address will be impacted by transport costs. We will find that the proximity to a fixed bus route, safe cycleway or simply being within walking distance of frequent destinations that negates the need for a car will become the key selection criteria.

People need to retain more of their disposable income. Increasing disposal income will improve our desperate high streets and let us lead better lives.

Other solutions such as autonmous cars such abeing developed by Zoox will provide a viable alternatives to personal cars.

Energy costs.

Houses compared to apartments and flats are inefficient energy wise. Developers don’t even offer a solar system to heat a daily tank of water.

Size

UK housing is too small for an anyone other than the smallest household unit. We need to increase the size of apartment and balconies where the benefits of single level living can allow people to live safely and independently longer.

Location

The assumption that home owners are also car owners will go.  The reality is that we need to be with a mile or so from towns and shops. The ability to walk, cycle or indeed use a mobility scooter offers the least cost solution and greater disposable income and ultimately a better quality of life.

It’s now time to stop building out and start building up.

It doesn’t have to be sky scraper but it does need

1) a lift to allow the elderly and young families with young children to use the upper floors

2) a large balcony where its possible to sit , grow plants and entertain.

3) to be of a decent size where a couple who use wheel chairs can function with dignity.