Friday, February 25, 2011

5 big housing lies and why the public doesn't buy the housing crisis

Earlier this month I was honoured to be a guest of the CIH president at his annual dinner. This huge annual event takes place in the Natural History Museum in London. Tables of the great and good of the housing industry were assembled around the Brontosaurus skeleton and under the gaze of Charles Darwin’s statue. This is always a helpful prompt to speakers enabling them to make self-deprecating jokes about how old they are how their views have had to evolve.

This year the speakers were in fiery form. There was a general theme that public and the media were not taking the housing crisis seriously enough. “Wake up and listen to the profession about the country’s housing crisis” We were told. The messages followed the common orthodoxy of our profession. You’ve no doubt heard them too There are record levels of housing need, record levels of homelessness, a record under-supply of housing,  the backlog in supply is increasing every year. The system is creaking at its seems, This is a time bomb set to explode, we must argue passionately for our industry. It was entirely honourable, but to me, strangely unmoving.

Last year I, along with 5 million others read the entertaining economics book Superfreakanomics. In it the authors; Steven Levitt and Stephen Dubner take a deliberately mischievous look at how things really work. They take the cold facts and come up with unorthodox conclusions. One example considers how the law affects prostitution. They argue that the greater the law cracks down, the more profitable and the more widespread prostitution become. The argument works like this. If the police arrest prostitutes they reduce the supply. The remaining prostitutes can therefore raise their price, making it more lucrative attracting more women to become prostitutes. In other words the orthodoxy of how to deal with prostitution is not only incorrect it's counter productive.

Now I don’t for one moment doubt the genuine belief and commitment of people in the housing industry expressed with such zeal by the CIH president and other speakers at the dinner, but I did wonder what Levitt and Dubner might make of it all. In the absence of persuading them to take a look I decided to try myself. I looked up the data and was slightly surprised to see that almost all of the facts and truths expressed by our industry on a daily basis turn out to be … well untrue. Here they are with references:

Truth 1: There is an undersupply of housing: Untrue, in 2008 there were 22,398,000 dwellings and 21,731,000 households in England a surplus of 667,000 dwellings

Truth 2: There is a growing shortfall in housing; Untrue, the growth in the number of dwellings in the UK has outpaced the growth in households every year since 1971

Truth 3: There are 5 million people in housing need waiting for social housing; Untrue, there are 1.76 million households on council housing registers in England which equates to about 5 million people. But these aren’t waiting lists, many of the households that are on them are in housing need, but others are not, anybody can register and some register in several council areas. Housing registers are a measure of demand for social housing. They are not a measure of housing need.

Truth 4: Homelessness is increasing: Untrue. Last year 40,000 households were accepted as being homeless by local authorities, 25% down on the previous year and a third of the number in 2003/4

Truth 5: Social housing is in decline: Untrue- there has not only been an increase in social housing every year, but since 2003/4 the rate of increase has gone up every year. Last year 33,120 new socially rented homes were added to the stock.

Is this the reason that the country hasn’t woken up to the housing crisis?

This is not to say there isn't a housing crisis. Many people in this country live in completely unsatisfactory housing conditions. The housing system doesn’t work on all sorts of levels for people. I also acknowledge that although the indicators I have discussed show positive progress, it doesn't mean that progress can be sustained into the future with less public money. But surely what this says is that the housing industry is a success, it's making things better for people. Yes there's a lot more that needs to be done, but if we are going to get people at large to see housing as an issue of national importance we need to break out of the cosy consensus and stop pretending things are worse than they really are. What the industry is saying may not just be incorrect, it might also be counter productive. We shouldn't expect people to believe us if what we say isn't true.


  1. Interesting article, I see you make no mention of differential between house price and salaries (even if increased 3 fold to cover a mortgage). Isn't the market demontsrating a mismatch between supply and demand?

    On Truth 1: at least 1/4million homes are second homes and therefore not available to households

    On Truth 5: doesn't Grant Shapps keep saying that social rented housing fell by 14,000 units while Labour was in power?

  2. Paul, you are quite right, but this isn't the point the housing industry makes. We are told there is an undersupply of housing, which isn't true. As for Grant Shapps, he is just as guilty as the industry.

  3. shocking but if you are right why is nobody else saying this? conspiracy?

  4. Ive reported a flat that has been empty for 10 years, no one cares. And anyone involved in property only cares about how much they can make.

  5. Dave, I don't know whether this is how you did it, but I'd reccomend reporting empty homes via this website
    Any problems - do let me know

  6. Or...

    Truth 1: The population is rising
    Truth 2: Households are getting smaller
    Truth 3: you can prove anything with statistics

  7. Hi i have used that site to report flat,over 3 months ago. They say that they will inform the local council.

  8. Dave, the website automatically forwards your report to the council. Unless the property is in one of a small number of councils in Scotland that have opted out of the website. The council have got your report.

  9. Thank you for this informative post.

  10. I believe that kind of situation can be found anywhere. There are lots of housing project buildings but it is not occupied because people can afford to buy one unit.

  11. I agree to the last comment. I also think that situation is all over the world. Economic crisis is one of the main causes of it.

  12. Thank you for this informative post.

  13. Interesting, would not have thought about it that way myself.

  14. Here's an unwelcome tip; stop designing big houses hoping for big money. Only the stupidly rich get to have 2 or more pf the things and budding families can only afford so much.
    Try calculating how much a budget home for a family of 4 will cost and keep to that sort of price range for a year then recalculate to ajust for changes in average income and such.
    Should help if you want to help this sort of thing from happening.

  15. I found this blog on google and it is very interesting. I'll include it in google reader. congratulations for the article.

  16. Thank you sdo much for your post.