a post by Lindsay Judge for the Resolution Foundation blog
The relationship between housing supply and demand is always going to be of interest to those (like us) who care about living standards and housing costs. The ONS household figures published last month have prompted us to think more about this topic, especially given the new data suggests fewer households will form over the next 25 years than previously expected. The downward revision is significant: while the 2014-based figures anticipated an average 210,000 additional households a year would set up in England over the next quarter century, the latest batch of numbers now suggests an annual total of 159,000. So is the (population) pressure off when it comes to the need to build new homes?
The household data allows us to explore this important question, but perhaps not in the way that is immediately obvious. These figures are sometimes used to argue that we already have abundant housing stock: as Figure 1 shows, although the ratio of dwellings to households has fallen in recent years, it is higher than it was in the early 1990s. In fact, for every 1,000 households living in England in 2016 there were 1,045 homes to go round – surely a sign of housing plenty?
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Just looking at numbers is not going to provide any answers. Are the homes empty because they in areas where there are no jobs? Are they way off a bus route to anywhere? Lots of etceteras.
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