By 2040, England’s 16+ population is set to grow by 6% and the country is estimated to have lost at least an additional 385,800 social homes. Dan Usher, economics director at Marrons, discusses why short-termism in politics and NIMBYism need to be put aside to ensure the housing stock needs of the country’s future inhabitants are met
Utilising the latest Office for National Statistics Census data, 2018-based population projections, local authority housing registers, social housing stock records and extrapolated housing requirement figures using the government’s standard method, we have painted a clear picture of England’s housing stock need in 2040 in our latest report and the results are staggering.
Between 2015-16 and 2021-22, more than 295,000 social rent properties owned by local authorities and registered providers in England were either sold or demolished. Of those, only 16% were replaced.
If this continues at its current rate, more than 385,800 social homes will be lost from the market by 2040.
With just 7% of local authority areas in England having homes selling for less than five times the average earnings of workers in 2023 – compared with 88% when the data was first recorded in 1997 – it is absolutely crucial the country gets a grip on its affordable housing stock.
The data is also showing the urgency in which we need to consider the ageing population and first-time buyers entering the market.
While, on the face of it, the first-time buyer demographic (25 to 44-year-olds) is anticipated to decline by 1.57% nationally, the age group remains a hugely important segment of the housing market.
The first-time buyers of 2040 are teenagers and young adults living with their parents today, so will be completely new entrants to the market.
The later living demographic (66+) is due to witness a 37% increase by 2040. Furthermore, conservative estimates indicate that 52% of properties occupied by this age group are projected to be underoccupied by two or more bedrooms in 2040 – indicating the lack in desire and of suitable options for rightsizing, causing a significant obstruction on the housing ladder.
The national picture
By 2040, England’s 16+ population is expected to rise by 6% to almost 50m, with Greater London and the East Midlands being the fastest-growing regions, each anticipating 12% growth to 8m and 4.5m, respectively.
Regional hotspots for growing student populations (18 to 22-year-olds) include Southampton and Coventry (32% growth each) and Portsmouth (26%).
Typically, regions in England will have more first-time buyers (25 to 44-year-olds) than those in the 66+ demographic in 2040. However, the East and North East are both bucking the trend – with more people aged 66+ than those in the 25 to 44-year-old age category.
To meet this burgeoning demand, at least 5.4m homes need to be constructed nationally. However, this figure is based on the government’s longstanding existing target of building 300,000 homes per annum, but recent estimates suggest this figure should be far higher; Heriot-Watt University suggests 340,000 new homes, of which 145,000 should be affordable, while research from the Centre for Cities states 442,000 homes to solve the crisis by 2048.
Increasing housing stock
The undersupply of housing in England is nothing new, and many have attempted to tackle the problem for decades.
Had the most ambitious scenario for increasing housing stock in Dame Kate Barker’s 2004 review been implemented, the country would have two million additional homes today – a shortfall equivalent to the number of properties in Manchester and Birmingham’s urban areas combined, according to the Home Builders Federation’s Beyond Barker report.
We are nowhere near meeting even the minimum projected housing need of 300,000 properties a year – the average is 215,5000 over the past decade – so parliament’s response to its own target is grossly inadequate.
However, the obsession with the number is meaningless if hitting targets is prioritised over and above the needs of local populations.
There is a necessity to build homes of all types and tenures in all regions of the country, particularly in London and the South East where unaffordability is so acute.
A national housing policy – support by a proper approach to regeneration, systematic review of green belt and an in-depth understanding of the socio-economic needs of a location – will highlight areas of opportunity and meaningful change.
Without this, we will see no movement in the market or developments that do not serve the population’s needs, placing the housing crisis in gridlock.
Planning properly
While the planning system is undoubtedly broken, it is likely a convenient cover up for a much bigger issue. We have the tools, expertise and space to plan properly, but development of any kind has simply become undesirable to the public.
The government-orchestrated rhetoric that focuses on the potential negative impacts of development – rather than taking time to understand the benefits – is wrong.
We must utilise the vast array of data we have at hand to futureproof our villages, towns and cities – taking a long-term view of the issue and offering the appropriate mix of housing types and tenures that caters to the needs of each local population.
Altering the common public perception that no new development is considered a ‘win’ is vital, as is promoting a proactive way of planning sustainably, rather than remaining in this never-ending reactive cycle, which will only continue to breed discontent with the industry.
Politicians need to show a strength of will, adopting measures that will ensure we deliver the homes we so desperately need if we are to correct the intergenerational unfairness that exists in our housing market; improve health, educational outcomes, social and labour market mobility; and free the economy from the shackles of excessive housing costs.
If we are going to meet the needs of the population in 2040, we need to prioritise the requirements of future residents and start building the right homes today.
To download a free copy of the Housing 2040 report, please click here.
Dan Usher
Economics director
Marrons
Tel: +44 (0)207 264 4413
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