Last Updated on June 4, 2025 by Karl Thompson
SUPPLY AND DEMAND
Housing supply is affected by both the quantity and quality of accommodation. Setting acceptable and affordable standards for policymaking purposes is therefore a complex task. In England the current official gauge is based on the minimum decent homes standard set by Labour in 2000, revised in 2006 to incorporate new health and safety ratings and meet the need for more eco-friendly, energy efficient housing. Similar, though somewhat tighter, standards were also introduced elsewhere in the UK along with targets as in England for social landlords to meet them. Nevertheless, in England for example, 27 per cent in the social sector and 37 per cent in the private rental sector in 2010 failed to meet the government’s decent home standard (DCLG, 2011), although this standard has not been updated since 2006 (Henderson, 2019) and review is now underway (DCLG, 2020).
Quality and quantity of housing are inevitably interlinked, at the end of the First World War this became a major political issue, captured in the slogan ‘Homes fit for heroes’ and prompting the development of public housing. At this time the supply was mainly about quality. During the Second World War, however, house building stopped, 450,000 houses were destroyed and 3 million damaged by enemy bombing. The immediate post-war decades therefore saw an insufficient quantity of dwellings (and initially building materials too), triggering the largest house building programme ever undertaken in the UK.
This meant that by the 1970s there was calculated to be a crude surplus of houses across the country. By the turn of the century, however, demand was outpacing provision once again, a process that intensified as house building stalled in the wake of the 2008 recession and continuing demographic change, sparking concerns over a ‘housing crisis’. In England, for instance, the government predicted an annual growth in new households of 232,000 between 2008 and 2033, double the current annual rate of house building (DCLG, 2010a; Montague, 2012). Significant shortfalls were also identified in Wales and Scotland, though less so in Northern Ireland (Pawson and Wilcox, 2011).
Regional changes also impact here with economic factors leading people to move to areas with greater employment opportunities. However, housing does not move with households, with the result that supply and demand do not easily match. This can lead to shortages in some areas, with empty and hard-to-let properties in the older industrial areas of the UK and shortages in growth areas, most notably in the South-East of England. House prices in such areas consequently became relatively much higher, leaving young adults unable to purchase a home.
Figure 10.1 illustrates recent changes in the pattern of home ownership. Whilst owning outright was the most common type of tenure for those 65 years and over, for those aged 16–64 years old ownership with a mortgage was the most common (40 per cent). However, since 1993 the number of young people with a mortgage has decreased and more young people are in privately rented accommodation – a quarter of this age group in the early 2010s compared to 1 in 10 in 1993. More broadly demographic and cultural changes also affect demand.
- Rising life expectancy means there are more elderly occupying homes for longer than previously and often single-person households.
- Young people too are living as singletons (but with large numbers living with parents until their mid-thirties due to limited affordable housing) or childless couples for longer.
- More couples are separating or divorcing, dividing the household into two.
- Rising birth rates and future pressures within schools may influence demand for housing.
- There have been increased numbers of ‘concealed’ households, where an older generation (e.g. elderly parents) move in with one of their adult children and their family or a young couple living with parents.
- School performance can also impact on demand for housing in certain areas – if a school is well-performing people wish to move into the relevant catchment area to get their children into those schools.
Figure 10.1
Home ownership since 1980, England. Source Ministry of Housing, Communities and Local Government, 2020.
These developments in demand and supply are the major factors influencing the housing market, driving up rents and house prices in places where prospects are good and large numbers want to live (so-called hotspots), and leading to low demand and empty properties elsewhere (often in areas with other significant socio-economic problems). They are also the issues that most concern policymakers as they seek to ensure decent housing is available for all, at prices they can afford and that also meets more recent concerns over environmental sustainability.
General interventions aiming to control the availability of and access to housing have been a feature of social policy for over a century, and have occupied a critical, albeit fluctuating, role in public debate. Indeed, it is probably fair to say that public policy change here has been more marked than in any of the other major areas discussed in this book. A key theme considered within this broader debate has been the changing nature of home tenure over recent decades.
HOUSING TENURE
House ownership is a rather complex legal and economic issue. Technically ownership rights apply to land rather than buildings (though in practice, of course, the two are inseparable), and, more significantly, these may be held outright (freehold) or shared (leasehold). The latter means the (freehold) owner of a house can rent (lease) it to someone else in return for payment. The effect of this, in simple terms, is to create different kinds of provision, generally referred to as tenures:
- Owner-occupied housing, where the property is bought for a capital sum from the builder or a previous occupier (usually with the aid of a mortgage; see below).
- Rented housing, where the dwelling is let by an owner, who retains a legal interest in it and collects rent payments from the occupier.
The latter is provided with varying tenancy arrangements by different types of owners, the main ones in the UK being:
- Private landlords.
- Local Authorities (LAs) providing public housing (initially called council housing).
- Independent, non-profit Housing Associations and other regulated suppliers (registered providers in England, registered social landlords in Wales and Scotland; registered housing associations in Northern Ireland).
Provision by the last two, especially since legislation in 2008, is generally referred to as social housing and can also include low-cost home ownership, though this is a small proportion of the market.
Markets for housing have long operated for both owner-occupation and private renting, going back to the nineteenth century, whilst aristocrats and middle classes could build or buy their own home. For most people this was financially impossible, and most lived in accommodation rented from someone else. The massive population growths and shifts which accompanied the Industrial Revolution meant those (few) people who owned land in the new urban conglomerations could benefit by building houses to rent for the new working classes. Thus, the private rented market expanded rapidly during the nineteenth century, but with high levels of exploitation by the (rentier) landlords. Most of the dwellings built for rent were small, badly constructed, unsanitary and generally overcrowded, with many poorer families having to manage in one or two rooms.
Philanthropic attempts at improvement had little impact and by the turn of the century it was clear the private rental market had not delivered adequate or sufficient housing. The subsequent history of housing policy is largely the story of how governments have sought to both regulate and provide alternatives to private renting. This led to a decline in private letting and the growth of LA houses to rent, bifurcating the rental sector. The other major development was the emergence of a new market for owner-occupiers made possible, by the spread of mortgages enabling people to borrow money to buy a home.
Like all markets the housing market has been driven by the profit motive and in seeking to capitalize on their holdings, those who own houses (or land) have not necessarily responded to housing needs. Governments have sought to meet these, but have had to do so through intervening in, or providing alternatives, to that market. Housing policy in practice therefore has been about the relationship between the operations of private markets and the meeting of public needs. It is complicated, moreover, by overlaps with economic policy and, particularly in this century, by the extent to which the funding of private housing has become part of a global financial market.
As indicated above the outcome has been significant shifts in the balance of provision between the different tenures over time (see Figures 10.2 and 10.3). In the UK, for instance, the last century saw a contraction of private renting, increasing owner-occupation, a rise and then fall in LA provision, and a growth in the role of Housing Associations. But from the turn of this century whilst the latter trends deepened and Housing Associations overtook LAs as the main social housing provider, home ownership fell for the first time since the 1980s. This was paralleled by a resurgence of private renting. Studies suggest these trends are likely to continue over the next decade, with home-ownership falling to just under two-thirds and private rental growing to a fifth or more of tenures in England (Whitehead et al., 2012).
It is important to note that housing is built to last and therefore generates a physical legacy. With the UK’s housing stock being amongst the oldest in Europe (Andrews et al., 2011) with only 21 per cent of homes in England built since 1980 and 22 per cent constructed before 1919 (DCLG, 2012). Some old houses are lavishly sized and proportioned and, especially when renovated, provide some of the most expensive homes around. Others, particularly those initially built to rent, still constitute some of the poorest quality housing on the market. In the past many older houses were deemed unfit for human habitation and demolished, although more recently the focus has been on upgrading.
To return to the homepage – revisesociology.com