UK Housing Market Over Crowding Ratio
Housing-Market / UK Housing Jun 04, 2022 - 10:52 PM GMTBy: Nadeem_Walayat
The following is one of my custom UK housing market indicators that more clearly illustrates the degree of housing market crisis that Britain finds itself in as a ratio between the accumulative change in population since 1970 against the accumulative number of new completed house builds also since 1970 which shows the magnitude of the trend in over crowding of Britain's housing market that given recent mainstream press headlines based on academic studies clearly remain largely blind to the consequences of, because they still are unable to visualise the magnitude of Britain's housing crisis that has WORSENED since Britain voted to LEAVE the EU which should act as a warning to those who contemplate ever holding a second EU referendum, as it implies LEAVE would win by an even bigger margin next time!
The ratio illustrates the change in trend that started to take place during the mid 1980's that coincided with the Thatcher governments reversal of the policy for the construction of social housing and implementation of the right to buy scheme that resulted in the sale of millions of socially owned local council housing whilst at the same time putting restrictions on the the construction of new social housing. The Thatcherite measures were not just adopted out of spite for socialism, but instead was clearly as a result of academic government advisors looking in the rear view mirror at what had happened during the 1970's, namely the mass exodus of millions of Brit's who become economic migrants populating mainly North America and Australia and thus resulted in the over supply of UK housing.
This lack of insight of what was going to happen next laid the seeds for the property boom that began in the mid nineties as house prices responded to the lack of supply to meet new demand that has persisted since the mid 1980's. With Tony Blair's Labour government exacerbating the trend for the inability of supply to keep pace with population growth which ensured continuously persistent upward pressure on UK house prices that despite the great recession of 2008-2009 still showed an accelerating trend as new build supply that currently stands at 220k per year is set against government estimates for a requirement of at 300k per year, with 350k being a more realistic estimate to meet demand given the trend for falling household size, which thus ensures that the UK's over crowding crisis just keeps worsening with each passing year just as it has done or the past 20 years!
Remember the graph is a ratio of how over crowded Britain is, having gone from a ratio of 0.46 in 2000, when perhaps housing was largely affordable for Britain's hard working families with average house prices at £80k. To today's ratio of 1.11 (2021) that is worse than the previous years and thus average house prices are now £278k!
So I hope you now fully understand the true nature of Britains housing crisis and what the journalists and academics fail to see, hence their doom and gloom housing market crash is always coming headline stories in the mainstream press.
And this analysis does not even consider the fact that each year the total number of properties remaining empty continues to rise either as a consequence of being up for sale, let, legal issues or falling derelict. This total is now more than 1 million empty properties at any one time, a number which despite demand looks set to continue to rise as many of the derelict buildings will only come back on the market when they have been demolished and rebuilt, so erroneously counted as new builds when they should be classed as rebuilds.
This article in an excerpt from my most recent extensive analysis focused on UK House Prices Three Trend Forecast 2022 to 2025, where I pealed away multiple layers of the UK housing market of to arrive at a high probability trend forecast.
UK House Prices Trend Forecast 2022 to 2025
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Nadeem Walayat has over 30 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis focuses on UK inflation, economy, interest rates and housing market. He is the author of five ebook's in the The Inflation Mega-Trend and Stocks Stealth Bull Market series that can be downloaded for Free.
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