Domesday Live

Why is housing so expensive?

Homes cost a lot because England has built fewer than it needed for decades while more people wanted them, and because cheaper borrowing since 2008 let buyers bid prices up. Wages have not kept pace, so the same house takes more years of pay to afford.

Why it happens

• Too few homes have been built. England adds roughly 200,000 to 250,000 homes a year. Estimates of what is needed are about 300,000. Years of shortfall add up, so there are fewer homes than there are households wanting one.
• It is hard to get permission to build. Planning rules, the green belt and local opposition limit where homes can go, and land with permission is expensive. Building is also slow, so a rise in demand takes years to be met.
• Borrowing got cheaper, then dearer. Mortgage rates fell for over a decade, so people could borrow more and pay more for a home. When rates rose again from 2022, prices stalled in many places but the cost of buying did not fall.
• Pay has not kept up. House prices rose far faster than earnings from the late 1990s, so the price of an average home is many more times the average salary than it used to be.
• More people, in smaller households. The population has grown, and more people live alone or in couples, so more homes are needed for the same number of people. Second homes and landlords also compete with first-time buyers.