A recent Financial Times article points out the huge disparity in price between different areas of the country when it comes to purchasing a home. The FT’s research compares different boroughs of London with different areas of the country in terms of total value of the housing stock. Some of the data that comes out of the study clearly shows the extent of the problem in the UK, with people being unable to purchase homes in major cities close to where the jobs are. This is especially pronounced in London.
For instance, London’s SW1 postcode has 33,000 properties which are worth £54bn, while a total of 344,000 homes in Liverpool, over ten times as many, are worth almost the same figure of £51bn. Although this example uses London’s most expensive post code, it does illustrate the challenge faced by buyers in the capital where home ownership is out of reach for most people.
The problem then is how do we solve this? Well, unfortunately there isn’t a quick fix solution as housing prices are unlikely to fall significantly any time soon. We do however have a range of options that the government could pursue to help people to live closer to their work.
Firstly, we can build more homes on brownfield sites. These sites are often unattractive to house builders although, if local authorities were allowed to borrow money to develop homes on these sites they could then be offered as affordable housing or as shared ownership schemes. These buyers would then benefit from the equity generated by the property and be able to afford a home that was within their reach.
Another option is to build new apartment blocks with greater height and density than those traditionally built throughout the UK. If you compare London to other major cities in Europe it is far less dense, as traditional development in the capital saw semi-detached houses with gardens. In cities such as Paris and Berlin the authorities built high density apartment blocks for the residents. In addition to building in greater density, we can also build taller apartment buildings typical of those in cities like New York.
The final option, to allow people to live in decent accommodation in more affordable areas while still being able to access their place of work quickly, is to increase the speed and capacity of the public transport system and the road network.
Whilst there is no ‘quick fix’ solution to the housing crisis in major cities, we can act now to make housing more accessible and more affordable for residents.
This article was written by Alan Gibbs, Account Executive at MPC.