The Spring Statement and the Housing Affordability Crisis
The Chancellor has just left the podium, having delivered yet another set of fiscal measures in what remain unprecedented times. The combination of a bad pandemic hangover and the war in Ukraine is causing huge inflationary pressures and a 'cost of living crisis'. With such pressing issues on his plate, it probably isn't surprising that planning and housing got very short shrift. There are some interesting environmental measures, but my colleague, the brilliant Jill Crawford, will pick up on those in a separate post.
Although the crisis facing planning, and housing delivery, did not feature in the Spring Statement - it may well still hit the headlines. This morning the Office of National Statistics published its latest set of data on housing affordability in England. It is a depressing read*.
Section 3 of the Report states that, when compared to 2020:
"At the local level, housing affordability worsened in 300 out of 331 (91%) local authorities. Average house prices increased in 96% of local authority districts in England and Wales, while average earnings increased in 50% of local authorities."
It then goes on to state that:
"In 2021, the average house price was between 12 and 24 times the average workplace-based earnings in 23% of local authority areas. These proportions have increased since 2020, when house prices in 15% of local authority areas were between 12 and 24 times the average workplace-based earnings.
Only 16 local authority areas in England and Wales had affordability ratios of five or less, compared with 27 in 2020, and 270 in 1997."
Now, I am not an economist, but Dan Usher and the Barton Willmore Development Economics Team are crunching the numbers as I type. The team's early analysis shows that 24 local authorities have seen their median affordability ratio increase by over 20% - demonstrating a significant worsening in their affordability position.
Whilst the jury is still out on the exact causes (although our historic and systemic failure to build enough houses will play some part), one thing is definitely clear. As Dan said when I caught up with him earlier** " Whilst the increase in the affordability ratios is definitely bad news if you are looking to get on the housing ladder; A higher ratio also means higher minimum housing need for local authorities to include in their plan. Which could be controversial in the current climate".
The worsening affordability ratios, particularly in the south east, will increase pressure on Local Planning Authorities and both their housing need and housing delivery figures.
This is already a difficult conversation. Just at the start of this month, the Housing Minister faced calls in parliament to revisit housing need calculations. A debate that was reported on in detail by Andy Black in his post "The Sussexes and the war on Housing Numbers"*!
Since then we have had an additional 42 local authorities across England dragged into the Natural England guidance on Nutrient Neutrality - which is only going to further constrain the supply of new housing - and a cost of living crisis which is going to make it even harder for those not on the housing ladder to save for a deposit.
There are absolutely no easy answers to this, it is a complicated and multi-faceted issue ... but the one thing I can absolutely guarantee is that ignoring this particular problem is not going to make it go away.
* so depressing, in fact, that I have chosen to illustrate this post with a picture of my youngest at soft play just to cheer myself up. That said, having read the report, I am now in abject terror that she and her sister may still be living with us when they are forty....
**by which I mean bugged him on LinkedIn
**! read it. It is highly entertaining. Although you may want to skip the footnotes, just in case you get caught in an infinite loop of cross-referencing!
In 2021, the average house price was between 12 and 24 times the average workplace-based earnings in 23% of local authority areas. These proportions have increased since 2020, when house prices in 15% of local authority areas were between 12 and 24 times the average workplace-based earnings.
Only 16 local authority areas in England and Wales had affordability ratios of five or less, compared with 27 in 2020, and 270 in 1997."”
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