A new report by think tank the Resolution Foundation explores
the question of how incomes and housing costs have interacted over
time and how affordable has housing been for different groups in
the UK over the last two decades. It caused a media storm when it
was published earlier this week.
The research shows falling homeownership across England and
increasing problems in accessing homeownership outside London.
Key findings of the report "The Housing Headwind"
show:
- Real average working age household income has grown by £32 a
week (7 per cent) between 2002-03 and 2015, while real housing
costs have grown by £21 a week (32 per cent). As a result, two
thirds (66 per cent) of the income gains over the period have been
absorbed by rising housing costs.
- Real average London household income has reduced by £29
(minus 4 per cent) over the period while real housing costs have
grown by £36 (29 per cent).
- Real average household income for those headed by someone aged
25-44 has grown by £12 a week (2 per cent) over the period while
housing costs have grown by £25 a week (25 per cent). Consequently
rising housing costs have absorbed the income gains of this group
more than twice over.
- Real average private renter household income has grown by £8 a
week (2 per cent) over the period while real housing costs have
grown by £19 a week (16 per cent). This means that the income gains
made by this group have been absorbed by rising housing costs more
than twice over.
- Real average low to middle income household income has grown by
£18 a week (5 per cent) over the period while housing costs have
grown by £23 a week (36 per cent). As a result, all and more of
their income gains have been absorbed by rising housing costs.
Analysis shows that if a dual earning household with one child
was paying the same proportion of their income in housing costs
today, as an equivalent family did in the early 1990's, they would
be £1,400 a year better off - this loss being the equivalent of a
9p rise in the basic rate of income tax.
The report highlights that those renting social housing have a
different experience from other tenure groups given that their
living standards are determined more by policy than by the vagaries
of the market. Changes that reduce the supply of social rented
housing, set sub-market rents at higher levels or reduce eligible
rents for housing benefit purposes have all squeezed the income of
social renting households over time.
It also argues that failing to tackle the issue of housing has
consequences beyond the immediate pressure on household incomes and
that if housing is to be turned from a headwind to a tailwind a
fundamental rethink of housing policy is clearly required.
View the Resolution Foundation' report.