How Britain's housing became such poor value for money

Britain's "expensive, cramped and ageing housing stock offers the worst value for money of any advanced economy", according to a new analysis from an influential think tank.

The Resolution Foundation compared housing costs, floorspace, quality and price levels across countries, and concluded that households in Britain are "paying more for less". "When it comes to housing, UK households are getting an inferior product in terms of both quantity and quality," said the think tank.

Britain's cramped, older, expensive housing

Using OECD data, the Resolution Foundation compared the UK's housing stock to that of other similar economies. Although there was "limited cross-national data" on floor space, homes in England had less average floor space per person (38 square metres) than many similar countries, including the US (66 sq m), Germany (46 sq m), France (43 sq m) and Japan (40 sq m).

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The analysis also found that the UK's houses are comparatively older, with 38% of homes built before 1946, compared with 21% in Italy and 11% in Spain. The age of Britain's homes was found to have a knock-on effect on energy efficiency. 

The UK's high level of home ownership also obscured how unaffordable its housing is relative to other countries. The analysis found that if all of the country's households were renting homes on the open market, they would have to devote 22% of their spending to housing services – "far higher" than the 17% OECD average, said the foundation, "and the highest level across the developed economies with the solitary exception of Finland".

Reducing housing shortfall could take 'decades' 

The findings are likely to "inflame an already heated debate" about housing and planning in the run-up to the next general election. Both the Conservatives and Labour are seeking to "win over younger voters struggling with sky-high rents", said the Financial Times. 

"Young people have turned against the Tories not simply because of housing, but it certainly has not helped," said Robert Colvile in The Sunday Times. House building levels collapsed in 2023, with the number of homes built "likely to have been 100,000 lower than in 2022". 

One clear way to make housing more affordable is "to build more of them". But not only is the number of houses being built "way too low, but the houses we do build are way too expensive and way too small". Although it is "tempting to blame the big developers", said Colvile, a recent investigation by the Competition and Markets Authority pointed the finger at "our broken planning system", which "makes it far too easy for people to block developments, while not giving them enough say on how they affect their neighbourhoods".

There are a "multitude of culprits" for the failure of housing supply to keep up with demand, said Jeremy Warner in The Telegraph. They range "from Nimbyism to bureaucratic sclerosis, underinvestment in affordable public housing and monopolistic private sector builders". But "the biggest cause of the lot" is immigration, said Warner. Since the turn of the century, three million homes have been built in England, but the population has grown by around eight million, "nearly all of it immigration".

Yet even if Britain were able to substantially reduce immigration, "we've already reached a critical mass where new household formation is still likely to outstrip today's pathetically small trickle of new housing supply for years to come". Labour has "stepped forward with a plan which certainly cannot be faulted for ambition". Shadow chancellor Rachel Reeves has promised to tear up the planning system and reintroduce mandatory local housing targets. 

But making up for the current shortfall is likely to take "decades", said Warner, and to require a "huge increase in housebuilding capacity". And "as things stand, the skills and supply chains for such a task do not exist".