Saturday, 23 July 2016

Raviv Dozetas : Historical background to today’s problem

With much of the Uk cities and housing stock destroyed after WW2 and during that time the almost standstill of house production, a vast campaign ensued to establish fast, quality pre-fabricated housing to house the UK post war population, the advent of high rise council blocks and council estates was established. Millions of citizens lived in council provided housing.
Michael Heseltine then a member of Thatcher’s government stated in the early 1980s "There is in this country a deeply ingrained desire for home ownership. The Government believe that this spirit should be fostered. It reflects the wishes of the people, ensures the wide spread of wealth through society, encourages a personal desire to improve and modernize one's own home, enables parents to accrue wealth for their children and stimulates the attitudes of independence and self-reliance that are the bedrock of a free society.’
This arguably marked the start of the inflationary house bubble. Of approximately 6 million council homes in the early 1980s 2 million were bought then,with many millions more over the decades to follow. Sincethis time the UK has experienced an almost nonstop upward shift in house prices.
image 1
The above graph from the ONS (Office for national statistics) shows house price increase from 1980 to 2013, by e.g. a £20 000 average home in 1980 today is worth £185 000 a 925% increase.
image 2
A rising population and a rising single family unit population has driven house prices and rental prices relative upwards. This graph shows that single households represent a larger portion of the population than family units-thus increasing demand for homes.
image 3
This graph demonstrates that as the UK population has grown-house production has slowed from400 000 house completions in 1970 to 150 000 in 2010.
image 4
Adiminishing housing stock meaning less homes are being built per capita, this means as the population has increased the amount of housings following the population arm has not kept pace but actually decreased.

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