empty homes to drop to zero next year

The number of empty homes in England is set to drop to zero next year. This may sound improbable, but if you follow current projections of house building rates and household formations it must be true.

Government projections show the number of households in England growing to 27.5 million by 2033. In 2011, the year of the last census, the official statistics showed a surplus of 750,000 dwellings. In other words there were three quarters of a million more homes than households. This neatly coincides with the official number of empty homes that year.

But the population is growing fast and as we are often told, house-building rates are not keeping up. In fact if we were to assume that house building carried on at it’s current rate for next few years (and there is no obvious reason to think that anything else will happen) the surplus will reduce to 200,000 this year and disappear altogether in about November next year.  This scenario would have many effects including me being out of a job!

But this surely cannot be true. If it were, work would already be underway on every single empty building in England. A glance out of my window here towards the Heygate estate would indicate this is very definitely not the case.  In fact, although the numbers of empty homes are linked to housing demand, the effect is quite slow. Empty homes are what economists call an inelastic supply. This means where there is a high level of demand for homes the number of empty ones will reduce, but not by anything like enough to meet all of the demand.  The number of empty homes has indeed decreased in recent years, but never by more than 20,000 in a single year.

There is an old adage that all models are wrong, but some models are useful. As such, the apparent empty homes conundrum will probably be solved when we find out the government household projections were incorrect. If for example, the number of single person households turns to grow at half the rate that the projection indicates, the current housebuilding rate is just right and there will be no shortfall. 

This all goes to show that we shouldn’t get too bogged down in statistics. We all know that real people are facing real housing problems (most of them linked to housing being too expensive). It’s self evident that getting empty homes into use is a useful thing to do in these circumstances but won’t solve all of the problems. Its also certain that it won't work the other way either. I predict another significant drop in empty homes numbers this year, but I would bet my job on it not droppping to anything like zero next year.  

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 http://www.communities.gov.uk/documents/housing/xls/table-102.xls

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 http://www.statistics.gov.uk/articles/social_trends/st41-housing.pdf

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. www.communities.gov.uk/documents/housing/xls/141488.xls

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 www.communities.gov.uk/documents/housing/xls/141488.xls

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. http://www.communities.gov.uk/documents/housing/xls/1406060.xls

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.