Introduction

Problems of housing affordability are not new. Many ordinary households a hundred years ago would recognize some of the issues to be discussed in this book. Rent controls had been introduced in 1915 because of housing shortages, but house prices still rose sharply in 1919 and 1920. As we shall see, the problems and the proposed solutions remain similar today. However, it would be wrong to conclude that there have been no improvements over the long term: nationally, at the time of the 1911 census, there were, on average, approximately five persons in each property, but this had halved a hundred years later. On this measure, overcrowding has declined enormously. Furthermore, even in the immediate aftermath of the Second World War, 64 per cent of households were without piped hot water to a bath, sink and hand basin. Now we no longer bother to measure shortages of this type.

The majority of households now enjoy generally good housing conditions and affordability problems primarily concern groups excluded from these wider improvements. Some groups benefit from rising house prices and low outgoings, notably those who have already paid off their mortgages, and there are now more households who are outright owners than those with mortgages, in part because of an ageing population. But two groups – those on low incomes and those at early stages of their housing careers – continue to lag behind. Furthermore, an increasing proportion of outright owners with high incomes are likely to own a second home, whereas low-income households are unlikely to own even one, widening the dispersion of wealth, which depends heavily on property ownership. The affordability crisis, therefore, has strong distributional elements. The market has generally worked adequately for the majority, but not for the poor and the young.

So why do we care so much about housing affordability? There are, after all, many goods that certain groups in society are unable to obtain, given their incomes and the prices of those goods. Part of the explanation, as noted, arises from the effect on wealth distribution. But, more fundamentally, successive governments have accepted that all households should have the opportunity to achieve a decent standard of housing and have provided subsidies to support that standard.