Why Census Data Shows We Need to Build More Homes
The ONS released its first census data results last month, starting with population estimates (which the Center for Cities analyzed here). Alongside this, it also released data on the number of households in England and Wales, showing that they have increased by around 1.4million since 2011.
Comparing these estimates with local population growth rates and housing construction trends shows a clear and unequivocal trend: certain areas of the UK are in dire need of new homes. Here’s why:
In many cities, population grew faster than households
Between 2011 and 2021, the population of England and Wales increased by 6.3%. The number of households also increased, but at a slightly lower rate (6.1%). This may not seem like a big lag, but this national figure is misleading because national markets are made up of dozens of local markets.
Looking at the subnational level tells a different story. In cities and large conurbations, the gap is much greater: the population increased by 6.5%, against only 4.9% for households.
Figure 1 shows how these dynamics play out in cities. In 34 of them (those on the right side of the right), population growth has exceeded the change in the number of households.
Figure 1: In the majority of cities, population growth has exceeded the change in the number of households
Source: ONS 2022
This is a sign that the average number of people living in the same household is increasing. As shown in Table 1, it is particularly striking in a number of southern cities. Of the ten cities where the average household size has increased the most since 2011, seven are in the South. In Slough, for example, the average household size increased by 10%, followed by Oxford and Cambridge (7% and 5%, respectively). At the other end of the spectrum, in a number of northern towns such as Doncaster and Sunderland, households have actually become smaller.
Table 1: The gap between population growth and household growth is particularly large in cities in the South
|City – top 10||Evolution of the number of people per household (2011-2021)||Down town 10||Evolution of the number of people per household (2011-2021)|
Source: ONS 2022
A higher average household size could simply reflect the fact that families got bigger and people had more children during this period. This may be true in some places, but only marginally: the patterns above are very similar when looking only at the working-age population.
On the contrary, this gap is probably a symptom of a much more serious problem, namely the rise of roommates and, in some cases, overcrowding. This trend has been well documented in recent years, with more and more people living in multiple occupancy homes (HMOs). Cohabitation may well be a choice for some, but it is also likely part of a larger problem related to the housing shortage. The fact that it is particularly important in the most expensive parts of the country, where the demand for housing is highest, is no coincidence.
Slow housing construction delays household formation
Household formation depends on the availability (and affordability) of housing. Parts of the UK are being ravaged by a systemic undersupply of housing compared to local demand. There are a total of 19 cities where housing construction has not kept pace with demographic change over the past ten years. Again, the geography is very clear: either the largest cities in the UK (Manchester, Birmingham, Bristol, Leeds) or the smaller cities of the Greater South East (Milton Keynes, Oxford, Reading) . In these places of high demand, the housing shortage is driving up prices and rents, and many are forced to live in shared flats or stay longer with their parents.
Some have argued that the number of households and population has not reached projections (which underpin local planning and housing need estimates) to demonstrate that there is no shortage of housing in the UK. However, failure to meet projections for the number of households is a sign of unmet need, rather than excess supply. The reason these potential households have been “lost” is that housing construction has not increased with local demand.
The planning system is a bottleneck for building new homes and that needs to change
Making these cities more affordable will require building more housing, not only to meet current levels of demand, but also to create and stimulate new demand to live there. It also matters to their economies, as housing growth plays a key role in attracting and developing a local workforce.
Previous Center for Cities research has shown how this could happen, with estimates suggesting between 1.7m and 2.1m could be built around stations, in less than 2% of the greenbelt. To achieve this, we will need comprehensive planning reforms, as the current planning system effectively limits the number of homes that will be built in a city. An essential part of this reform should involve moving away from the current case-by-case mechanism that rations the supply of land for development and disconnects the supply of new housing from local demand.
The current Leveling Bill proposals are not quite the radical overhaul the planning system needs (namely, a move to a Japanese-style zoning system where development can continue unless the council not block it), but they will nevertheless make it easier to provide houses, if they are adopted by law.