The housing headwind: the impact of rising housing costs on UK living standards

Published on Housing, Wealth and Debt

This report explores the question of how incomes and housing costs have interacted over time. It asks a seemingly simple question: how affordable has housing been for different groups in the UK over the last two decades? Through this exercise, we show how housing costs have (or have not) contributed to living standards at different points in time, and identify who may be vulnerable to continued housing pressure over the course of this parliament.

  • Real average working age household income has grown by £32 a week (7 per cent) between 2002-03 and 2015, while real housing costs have grown by £21 a week (32 per cent). As a result, two thirds (66 per cent) of the income gains over the period have been absorbed by rising housing costs.
  • Real average London household income has reduced by £29 (minus 4 per cent) over the period while real housing costs have grown by £36 (29 per cent).
  • Real average household income for those headed by someone aged 25-44 has grown by £12 a week (2 per cent) over the period while housing costs have grown by £25 a week (25 per cent). Consequently rising housing costs have absorbed the income gains of this group more than twice over.
  • Real average private renter household income has grown by £8 a week (2 per cent) over the period while real housing costs have grown by £19 a week (16 per cent). This means that the income gains made by this group have been absorbed by rising housing costs more than twice over.
  • Real average low to middle income household income has grown by £18 a week (5 per cent) over the period while housing costs have grown by £23 a week (36 per cent). As a result, all and more of their income gains have been absorbed by rising housing costs.