Those in the UK are familiar with the challenges that accompany failed housing regulations, high demand, and low supply. A recent study by Resolution Foundation shows that those in the UK pay far more for housing than any nation in the OECD. Finland technically pays more, but not when factoring in the total amount the average Brit spends on housing costs. To put it in perspective, housing in the UK is nearly 50% more than the cost of others goods and services, the study found.
We warned about variable rate mortgages at the 2019 World Economic Conference in Rome. Mortgage rates have remained elevated since that period in the wake of the COVID economic tragedy. The UK has a higher rate of inflation than the general Euro Area at 3.4% in February vs 2.6%. The Bank of England is continuing to aim for that 2% target, similar to the Federal Reserve, but misaligned monetary and fiscal policies make it challenging.
Around 40% of housing was built in the early 1900s, the oldest inventory in the EU. Homes are significantly smaller, making apartments in New York City look lavish. Yet, co-housing arrangements are on the rise as people struggle to find a space to live. One in six young adults between 18 and 34 (2.6 million people) live in poor-quality housing, according to a report by the same think-tank. Overall, one in 10 people across the UK (6.5 million) live in subpar housing conditions. Homelessness is on the rise, especially among the youth. Youth homelessness in London has risen 20%, and Centrepoint Databank statistics reported an 8% rise (112,000 people) in young people seeking homelessness prevention measures.
Housing will be a key topic of discussion for the next election. Both sides want to implement plans to assist first-time buyers, but no one has made any meaningful progress to streamline the homebuying process or curtail the countless issues. One of the main issues is the migrant crisis – where will they house an additional 1.2 million new people when citizens cannot find housing? Simply put, the UK is full.
