Six key charts ahead of the housing White Paper


It’s been trailed all over the weekend, so it feels like we already know a lot of what is going to be in the much-awaited housing White Paper when it is finally published tomorrow. But will it really mark a sea-change in housing policy? Or be simply another document we can add to the pile of government papers on the topic? Anyone who cares about the living standards of low to middle households (LMIs) must be hoping for the former. Here are six charts that show why.


  1. Housing costs have borne down hardest on low to middle income households in recent years

Headlines often focus on runaway house prices and rocketing rents but it’s the relationship between housing costs and incomes that really matters. This first chart from our Housing Headwind report shows that households throughout the income distribution are spending a larger share of their income on housing than they were 20 years ago, but it is LMIs who really feel the pinch.

Chart 1: Average housing cost to income ratio among working age households by income group: UK

Source: RF analysis of DWP, Family Resources Survey


  1. Housing costs aren’t just an issue in London and the South East

Our second chart shows the proportion of working age households who spend more than a third of their income on housing costs, the point beyond which housing is widely regarded as unaffordable. The capital is often an outlier on housing charts and this one is no exception – close to a third of households living in London breach the affordability threshold. But as this also makes clear, housing costs increasingly bear down hard on incomes through much of the country. One in seven households in the West Midlands, the North West and Wales, for example, are spending an unacceptable amount on housing today.

Chart 2: Proportion of working age households spending more than one-third of their net income on housing costs, by region

Source: RF analysis of DWP, Family Resources Survey


  1. Home ownership remains a widespread aspiration but saving for a deposit is a real challenge for many

There are multiple reasons why most prefer to own their home, from security of tenure to the possibility of capital growth. But these benefits are increasingly the preserve of those on higher incomes or households who can turn to family for support. As our third chart shows, in 1997 an LMI household saving a reasonable share of its income every month would have accumulated enough for an average deposit within three years. Today, an equivalent household would have to save for twenty years, a time horizon that makes home ownership little more than a distant dream for many.

Chart 3: Estimated number of years’ required to save for a first time buyer deposit among low to middle income households: UK

Sources: RF analysis of ONS, The effect of taxes and benefits on household incomes, Lloyds Banking Group, Halifax House Price Index, Historical data FTB (ANN), Council of Mortgage Lenders, Table ML2, OBR, Economic and fiscal outlook, November 2015, Bank of England, Inflation Report, November 2015


  1. Even if they can overcome barriers to entry, many households remain locked out of home ownership

Chart 4 explores the ongoing costs of home ownership through a simple thought experiment. Here, we take the median weekly pay of a number of occupations and consider what share each would have to spend on their mortgage if they bought a house in the lowest quartile of the price range. Even with very low interest rates, a long mortgage term and a small deposit requirement, many such households with just one income simply could not afford to buy even the cheapest of homes.

Chart 4: Proportion of average weekly earnings spent on typical mortgage needed to buy house in lower quartile price bracket, England 2015-2016

Sources: Median weekly earnings from RF analysis of Labour Force Survey. House prices from ONS, Lower Quartile House Price data. Mortgage assumptions based on data from Council of Mortgage Lenders


  1. Demand side interventions have helped (mainly those some way up the income distribution)

Governments of all stripes have worried about declining levels of home ownership for many years but demand-side interventions have barely touched the sides of the problem as far as LMIs are concerned. Chart 5 shows the income levels of households who have purchased homes with support from a Help to Buy Equity Loan (and the predecessor scheme New Buy) over the past three years. As this makes clear, the average income of beneficiaries of such loans is significantly higher than the median, while less than one in five recipients fall into the LMI bracket.

Chart 5: Cumulative percentage of Help to Buy Equity Loan and New Buy recipients by income bracket, 2013-2016: England

Source: DCLG and HM Treasury, Help to Buy Quarterly Statistics, September 2016; other income figures DWP, Family Resources Survey. Figures shown are three year average gross household incomes


  1. Increased supply has to be part of the answer – but new build affordable homes are on the decline

We’re all expecting the White Paper to place a welcome emphasis on increased supply, but the preceding analysis should make us all think hard about the types of homes we need to build if those on lower incomes are truly to benefit. It is widely accepted that only a significant and sustained programme of house building will have a feed through to the market price of housing. Given this, our final chart showing how little new build activity can be considered ‘affordable’ should give us, and the government, pause for thought.

Chart 6: Increase in market and sub-market priced housing supply 2006-07 to 2015-16: England

Source: DCLG live tables 120 and 1000, November 2016

Note: Year refers to fiscal year

There are lots of yardsticks against which the housing White Paper will be measured in the coming weeks and years. Will relaxing height restrictions and allowing some incursion into the green belt really boost supply for example? Or can policy truly allocate supply more efficiently by incentivizing older people to downsize? But for us at Resolution Foundation, the real mark of success will be if the government ‘gets’ that housing is a majoritarian problem for sure, but one with a distinctive edge as far as low to middle income households are concerned. With a prime minister who has committed to helping ‘just about managing’ families, we live in hope.