Britons are paying more for less as the country’s housing stock offers the worst value for money of any advanced economy, behind the US, Germany and France.
UK households pay 57% more for the same housing as their counterparts in Austria, for example, and 36% more than those in Canada, according to a study from think tank The Resolution Foundation.
UK households pay more than any other of the 38 OECD (Organisation for Economic Co-operation and Development) economies in housing costs — bar from Finland — but are not getting their money’s worth.
High housing costs could reflect the cost of a superior quantity or quality of housing in the UK, but in reality they do not. The report shows that English homes actually have less average floorspace per person (38m²) than many similar countries, including the US (66m²), Germany (46m²), France (43m²) and even Japan (40m²).
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English homes also have less floor space, on average, than homes in crowded New York City (43m²). Overall, Brits get 24% less housing per person than Austrians and 22% less than Canadians.
As well as being cramped, the UK’s housing stock is also the oldest of any of European countries, with a greater share (38%) of homes built before 1946 than anywhere else.
For example, just 21% of homes in Italy, and 11% in Spain, were built before the end of the war. Older homes tend to be poorly insulated, leading to higher energy bills and a higher risk of damp, said the think tank.
Adam Corlett, principal economist at the Resolution Foundation, said: “Britain is one of many countries apparently in the midst of a housing crisis, and it can be difficult to separate rhetoric from reality. But by looking at housing costs, floorspace and wider issues of quality, we find that the UK’s expensive, cramped and ageing housing stock offers the worst value for money of any advanced economy.
“Britain’s housing crisis is decades in the making, with successive governments failing to build enough new homes and modernise our existing stock. That now has to change.”
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Housing in New Zealand offers the second worst value for money, followed by Australia and Ireland — all countries also gripped by housing crises.
To determine the actual market cost of housing, the analysis examined what it would cost to rent all homes — incorporating the imputed rents, or what owners would pay if they rented their home at market rates — to show how the market price of housing varies across a range of countries.
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Homes in England are more cramped than those in New York City, according to new analysis that showed UK property offers the worst value for money in the developed world.
The Resolution Foundation’s findings, which also show UK housing costs are also more expensive relative to general prices than in any OECD country, underscore the scale of the housing crisis in Britain. Many younger Britons are struggling to get a foot on the property ladder due to soaring prices, and the issue is rising up the political agenda ahead of an election expected later this year.
“By looking at housing costs, floor space and wider issues of quality, we find that the UK’s expensive, cramped and ageing housing stock offers the worst value for money of any advanced economy,” said Adam Corlett, principal economist at the Resolution Foundation.
“Britain’s housing crisis is decades in the making, with successive governments failing to build enough new homes and modernise our existing stock. That now has to change.”
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The Resolution Foundation found that if all UK households were “exposed to the full brunt of the housing market, the UK would devote the highest share of overall spending to housing” to every OECD country except Finland.
Some 38 per cent of UK homes were built before 1946, higher than the level of 29 per cent in France, 24 per cent in Germany, 21 per cent in Italy and 11 per cent in Spain. That means British properties by comparison are poorly insulated and come with higher energy bills.
The cost of UK housing and rentals has been sent surging by the lack of supply along with an upswing in demand, particularly in the post-pandemic period. While higher interest rates cooled the surge in house prices, rents in the UK and London are rocketing at the fastest pace on record.
The UK has struggled to build enough homes to meet the demand with just 234,400 new homes added in 2022-2023. That’s despite the ruling Conservative Party presenting a target to build 300,000 homes a year by the mid-2020s in its 2019 manifesto.
Estimates by Capital Economics show that this now should be closer to 385,000 to bring real house price growth in line with the European average.
Additional reporting by SCMP reporter