Rising unaffordability in the UK’s housing market
The latest figures from Halifax show that the average UK property now costs 8.1 times average earnings, which marks the highest recorded figure since lenders began tracking affordability a decade ago. The price to earnings ratio has climbed by 8% in the past year, up from 7.5 in 2020 as, in stark contrast to rising property prices, wage growth flat-lined due to the pandemic. With the gap only widening, there has never been greater need for affordable housing stock.
But for many, property prices will be the least of their worries. Last year, The Guardian reported that one in five renters had been forced to choose between paying bills and buying food due to the financial impact of Covid-19. One in four had to end their tenancy early due to the crisis.
The government’s eviction ban eased the pressure for many, but as the scheme ended in June, up to 400,000 renters were served with eviction notices or told to expect them, according to the Joseph Rowntree Foundation. However, this is likely to be just the tip of the iceberg. With one in seven fearing Covid-19 could leave them homeless as income stagnates and job losses mount, the UK appears to be on the brink of a social housing epidemic.
A lack of affordable housing supply
In order to clear the current housing backlog and ensure future demand is met, it is estimated that the UK must build 340,000 new homes per year for the next decade. However, it is also imperative that the right kind of homes are being built. Of those 340,000 new builds, the National Housing Federation estimates that 145,000, or 43%, must be allocated to social rent or shared ownership to ease the crisis.
Currently, we are far from meeting that demand. The latest figures from the Ministry of Housing, Communities & Local Government show that just 57,600 affordable homes were completed between April 2019 and March 2020. Likewise, with 68,300 new projects started, this indicates the completion figures we can expect to see in coming years.
Seeking alternative solutions to the UK’s housing crisis
With so many now at risk, property developers must act to increase the affordable housing stock, seeking alternative solutions that can provide quick relief amid growing demand.
Across the UK, 13% of retail spaces currently sit empty, with rates as high as 19% reported in areas such as the North East[. These figures are only set to grow, with PwC research showing an average of 16 stores shut up shop each day.
With the retail sector oversupplied by as much as 40%, according to Savills, why not repurpose our ailing high streets, department stores, and shopping centres to ease the housing shortfall? According to the Centre for Policy Studies, repurposing this disused retail space could bring 456,000 new houses to the market, and well over 500,000 if converted into flats.
At HSPG, we’re already delving into repurposing retail spaces to provide homes to those most in need. In Salford, work is underway to convert a former William Hill shop into five supported apartments that will provide safety and comfort to victims of domestic abuse. Likewise, a former Lloyds TSB branch is also being redeveloped to house those at risk of homelessness.
We know that more must be done to stop the UK’s chronic shortage of Affordable Housing from spiralling out of control. With more people than ever in need of support, housebuilders, providers, and local authorities must work together and devise novel ways to increase our affordable housing stock.
*David Searle is co-founder and COO of HSPG
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