The UK’s population is projected to increase by 4.3 million people over the next ten years, having grown by 4.1 million over the last ten. As the population has grown we have seen a massive change in how we use our housing stock. During this credit fuelled period property owners have seen their wealth increase substantially and many used it to purchase second homes or buy-to-let properties. Meanwhile those who don’t have a stake in the market have been left behind by soaring house prices.

Underlying this situation is a significant under-delivery of new homes. The chart below shows that since the early 1990’s, the number of homes in England has actually increased by more than the number of new homes being built.

As demand continued to grow, more housing stock has been brought back into residential use and larger homes have been converted into smaller ones. Given the pressures on existing dwelling stock, it is no surprise that the use of new build stock comes under such scrutiny.

Markets such as Liverpool and Manchester saw substantial new build development during the boom period. With the wholesale regeneration of areas in and around both city centres there has been a big increase in the proportion of more affluent people living there. This has had a positive impact on the local economies but will have left some existing residents priced out of the local owner occupier market.

Areas of new build supply don’t always attract more affluent households. Many cities have played a housing pressure valve role for London and the south of England. As an example, both Peterborough and Swindon have seen substantial new housing supply during the period prior to the credit crunch. Rather than attracting more affluent households, they have actually catered to less affluent households by delivering a more affordable product in bulk and attracting people priced out of markets across the south of England.

The two cities have also featured in our recent report on households who are not participating in the housing market. Since the credit crunch, we estimate that 500,000 households a year have been prevented from moving onto or up the housing ladder. Both Peterborough and Swindon’s housing markets have suffered significantly given their dependence on less equity rich and mortgage dependent purchasers.

We need future housing delivery to meet all sectors of the market including finding ways to meet the needs of those who are currently excluded. Markets such as Peterborough and Swindon offer an example of how we can build large scale affordably priced homes without pricing out local people.

Taken from
Spotlight: The Demographic Pressures of a Growing Population