Who built all that housing in England?

A couple of years ago I included a chart of house building in a blog post arguing that young people shouldn’t necessarily support the removal of planning controls. The chart covered the period from 1955 to 2010, and showed that:

The only time  that the UK has seen house building match demand, and kept housing affordable, was when councils built in huge volumes from the 1950s to 1970s. If you think price bubbles are all about supply, explain the continued volatility of house prices through the 1950s, 60s and 70s.

People who want to see a massive expansion in house building can have their spirits dampened in other ways. Christopher Buckle from Savills wrote an interesting blog post suggesting that, on that house building data from the 1950s to the present day, a major boom looks very unlikely. He wrote:

If private sector housing delivery grew by 7.5% every year until 2017, a period of 7 years unbroken expansion from 2010, output would reach 133,000 new homes per year.  This would still be 10,000 new homes per year short of the average level of delivery seen over the 50 years prior to the credit crunch.  Such a sustained period of expansion has not been seen since the 1950s.

But the charts used by me and Buckle didn’t cover the 1930s, a time when private builders erected more than two million homes, almost twice as many as they managed in the 2000s and when the population was much larger.

Back to the 1930s

Those who think we need to tear up the planning system to solve our housing crisis often refer to the 1930s as a golden age. So I’ve produced a chart that goes all the way back to 1923 for homes built in England:

I have had to combine two slightly different data sources for this. The period from 1923-1945 comes from  BR Mitchell’s Abstract of British Historical Statistics (which start in 1923), and the period from 1946-2011 from official government statistics (table 244) which also includes figures for housing associations. This is a bit naughty, but it’s the best I can do.

This shows that there was indeed an explosion of private sector house building in the 1930s, jumping from 144,505 homes in 1932 to 210,782 in the following year.

The role that councils played

But it also shows that councils were still a big force, a point made more clearly by this chart showing the proportion of the total homes built by housing associations, councils and private builders:

During the 1930s, councils still built a quarter of the homes. That rose to a whopping 73% in the 1940s (not surprising given there was a war on), 64% in the 1950s, and around 40% in the 1960s-70s. In 1997, the year Labour came back into office councils only built 0.2% of homes. Housing associations to some extent stepped into their shoes, but in the 1990s and 2000s they only built 14% of the homes.

Based on this data, and a lot of other reasons, I think there are three arguments for councils building more homes if we are to contain housing costs:

1. These homes will be affordable to the tenants from day one, and in perpetuity, whatever happens in the market.
2. In the twentieth century, the only periods during which we built enough homes saw a very significant role for council homes.
3. Councils building more will expand the construction industry so introducing greater economies of scale and potentially improving skills.

A final note of caution

However, I wouldn’t want to say this is an open and shut case, nor deny I have other reasons for supporting council housing.

It is too easy to draw very simplistic conclusions, and to then make a tenuous connection in order to propose quite radical policies. This is what I think is happening with the romanticism about the 1930s suburbs.

There is a similarity between this debate and that of rent controls, in which we often make comparisons between the UK rented sector and Germany’s. It’s interesting that Germany has a very successful and highly regulated rental sector, and relevant given that Conservative, Labour and coalition governments since the 1980s have opposed those sorts of regulations. But there are many other differences between the countries. Similarly, there are many differences between the UK today and in the 1930s.

Can we have a major private housebuilding boom, as we had in the 1930s, regardless of Buckle from Savill’s gloom about the period from the 1950s to the present day? Brian Green wrote a good blog post in 2011 arguing that a 1930s housing boom seems unlikely. He wrote:

I sense a new romantic surge of interest in the notion of a private-sector-led house-building boom driving economic recovery. But… there were huge differences…

I’d recommend reading his post for his full list of reasons, I won’t quote them at length here. The gist is that in the 1930s you had a large number of new potential home buyers, plentiful cheap credit, low land costs, little demand from landlords and investors and a housing market that was very affordable. His conclusion:

It would seem that if we want a new house-building boom we will need a far more ingenious and powerful set of market prompts than promoting a greater availability of higher loan-to-value mortgages, freeing up planning and continuing to supply mortgages at low interest rates.

You can draw your own conclusions from the data I have presented, and the links to the articles by Buckle and Green.