Housing shortage, what shortage? Every time I turn on the television or follow a news feed there is someone banging on about a housing shortage. It is clearly true to a large extent. There are not enough homes available in the UK for people to buy.
This is is reflected in the cost of housing compared to wages. The gap continues to widen especially in London where the average house price is £475,000 compared to a UK average of £233,000. Now a man can drown in a pond that averages four inches deep and averages can hide a multitude of sins but keep with me.
The average UK salary is £27600 which makes the average house an 8.4 times multiple. In London, where average salaries are about one and a half times higher, at just over £42,000 the multiple is 11.3 times. When we bought our first house, back in the early eighties, the multiple was between four and five. Indeed mortgage lending was capped at 3.5 time wages.
Clearly demand is outstripping supply yet there are more than 200,000 homes across the country that have been vacant for more than six months. More houses is not the extent of the problem. There are clearly other issues in play such as occupancy rates. I thought of this following a visit to a RSL where I found out that the number of people living in their properties is as low as 1.17. Again on average the UK figure is about 2.49.
Not only are there not enough new houses, there are too many empty properties and too few people living in them.
It is easy to jump to the conclusion that the housing shortage is due to the lack of new build yet, once again, the housing market is a stark demonstration that there is no such things as a simple cause and effect.