The chart shows how the population of England and the number of dwellingschanged between 2001 and 2011 — the two most recent censuses. Similar figures are also shown for four very different areas — Sunderland, Isles of Scilly, York and the London borough of Newham.

Overall, the number of homes in England has grown slightly more quickly than the population. But this is not true in each area of the country.

Why these specific areas?

They illustrate a wider story.

The population of Newham in east London grew by nearly 25 per cent over a ten-year period. New migrants, a relatively high birth rate and an influx of new residents attracted by the regeneration ahead of the 2012 London Olympic Games are all thought to have contributed to Newham’s growth. But over the same period the number of homes in Newham increased by only just over 10 per cent.

Newham is an extreme case but its experience of population growth outpacing housebuilding is characteristic of most other London boroughs. Housebuilding failed to keep pace with population growth across London as a whole.

Sunderland’s experience was very different. The population of the former industrial city fell during the first decade of the 21st century. With much of the industrial activity in decline, people looked elsewhere for jobs. But despite a 3 per cent fall in population, the number of homes increased by nearly 3 per cent.

Does this explain why house prices have grown so quickly in London?

Yes, at least partly.

The gap between housebuilding and population growth in London is likely to be one reason why property prices in the capital have grown so much more quickly than elsewhere in the country. But other factors, such as the growing role of overseas buyers in the prime central London market, have also played a part.

High house prices have prevented first-time buyers getting on the housing ladder, haven’t they?

The number of people owning their own home has fallen sharply over the past decade. In 2003, 71 per cent of adults owned their own home. But this had fallen to 64 per cent by 2014. This has been driven by a decline among younger adults.

By the time those born in the 1940s and 1950s reached their early 30s, two-thirds owned their own home. This has fallen to less than half for those born in the early 1980s.

So building more houses would help reverse this decline?

Yes and no.

A recent review of home ownership in the UK, led by the chief executive of housebuilder Taylor Wimpey and commissioned by Labour’s shadow secretary of state for housing, suggests that house prices were the dominant factor explaining a decline in first-time buyers getting on to the housing ladder before the financial crisis. But since 2008 two other factors have also come into play.

Tighter lending conditions have made it more difficult for first-time buyers to get a mortgage. The cost of high loan-to-value ratio mortgages was little different from low LTV mortgages before the crisis, but the gap has now widened. This reflects both new regulatory requirements and a decline in lenders’ risk appetite.

The wages of younger workers have also grown less quickly than those of older workers since the crisis, meaning younger first-time buyers are less able to compete with older purchasers interested in the same properties.

Original Source: https://www.ft.com/content/7c786744-b08f-11e6-9c37-5787335499a0