Despite the economy, house prices are rising – and with wages so flat, the dream of home ownership for many people, especially the young, is further away than ever.
Every day brings new calls to build more houses. It is an issue that splits the Conservative Party right down the middle – and not on any of the familiar ideological fault-lines. It is, perhaps, more of a generational conflict than anything else.
As things stand, the pro-development lobby have some very powerful evidence in their favour. But by focusing on housing supply, we forget the demand-side – which, according to Emily Badger of the Atlantic Cities site, could be about to change in a big way:
- “Demographers often describe the baby boom generation as if it were an indigestible mammal – maybe a pig, or a rabbit, or a really big rat – slowly moving through the python that is America’s population. As this generation has aged, the baby boom bulge has remade society in its image, first as a massive class of toddlers, later as rabble-rousers in the 1960s, then as solidly middle-class heads of household and, soon, as the largest class of retirees the country has ever seen.”
America’s demographic profile is similar to our own. And, so, in overhauling housing policy, we need to remember that the generational structure of our population is subject to the passage of time and that the inevitable changes will have a massive effect on demand:
- “In the 20 years between 1990 and 2010, these consumers were at their peak family size and peak income. And suddenly, there was massive demand in America from the same kinds of people for the same kinds of housing: big, large-lot single-family homes (often in suburbia). In those two decades, calculates researcher Arthur C. Nelson, 77 percent of demand for new housing construction in America was driven by this trend…
- “In the coming years, baby boomers will be moving on (inching further through the python, if you will). ‘They will want to sell their homes, and they’re hoping there are people behind them to buy their homes,’ says Nelson, director of the Metropolitan Research Center at the University of Utah.”
And therein lies the rub. Not only are the post-baby boom generations smaller in size, they’re also increasingly unlikely to be homeowners. Furthermore, they’ll be staggering under a heavier burden of personal and public sector debt. So, all in all, that means fewer buyers, with fewer assets, for more homes on the market. How do you think that’s going to work out for property prices?
Of course, there are a number of differences between the American and British situations. For a start when our baby boomers were raising families, the homes they built weren’t quite as unsuitable for retirees as they are in the US:
- “…from 1989 and 2009, 80 percent of new homes built in that era were detached single-family homes. A third of them were larger than 2,500 square feet. And most startling – 'I checked my numbers over and over again,' a bemused Nelson says – 40 percent were built on lots of half an acre to 10 acres in size.”
Though some bemoan the pokiness of British housing and the difficulty of getting planning permission for out-of-town, greenfield developments, this may turn out to our eventual advantage. Roomy, exurban homes with plenty of land are great when you have your health, your children and a car or two – but they’re difficult to manage when you’re old.
So, the irony is that our restrictive planning policies have, in this respect, accidentally prepared us for the future. Of course, when America’s housing market crashes – in 2020, say the experts – the ensuing global economic chaos will mean that we’re all done for anyway.