Margins and Mortar episode 18
Few issues loom as large over Britain’s economic and social future as housing. It shapes where people live, how they work, and the opportunities available to them. From high house prices to regional inequality, many of the country’s most persistent challenges appear, at least in part, to trace back to the property market.
The argument that fixing housing could help fix Britain is compelling – but also deeply complicated. Housing sits alongside the NHS as one of those policy areas that is widely acknowledged to be broken, yet politically difficult to reform at the scale required. Governments often reach for headline policies, but these tend to address symptoms rather than underlying structural problems.
There is no doubt that housing has played a powerful role in shaping social mobility. The introduction of right to buy in the 1980s transformed access to home ownership for one generation, offering a pathway to wealth that is far harder to replicate today. The challenge now is that those opportunities have not been replenished. Access to social housing is far more limited, and the route from renting to ownership has become increasingly difficult.
At the same time, the cost of moving within the housing market has become a significant barrier. High transaction costs, particularly stamp duty, discourage mobility and contribute to a system where people move home far less frequently than in the past. On average, households now relocate only once every couple of decades, a pattern that suggests a lack of dynamism in both the housing market and the wider economy.
This has wider economic consequences. When people cannot easily move to where jobs are available, labour markets become less efficient. Regions with strong employment opportunities struggle to attract workers, while others are left behind. In effect, housing costs and constraints act as a brake on growth, reinforcing geographic inequalities in income, health and education outcomes.
Yet measuring the true impact of housing on social mobility is not straightforward. Changes in education, employment patterns, and household structures complicate comparisons over time. For example, far more young people now attend university than in previous generations, delaying entry into the workforce and affecting early career earnings. These shifts make it harder to isolate the role of housing alone.
The question of whether UK house prices are “too high” is equally complex. In nominal terms, prices appear elevated and dominate public debate. However, when adjusted for inflation, long-term price growth has been far more modest. In real terms, house prices have largely moved sideways over the past two decades.
A more meaningful measure is affordability relative to income. Here, the picture depends heavily on how income is defined. While comparisons are often made using individual earnings, the reality is that most households now rely on two incomes rather than one. This shift has helped sustain affordability levels, even as headline prices have risen. In recent years, rising wages and market adjustments have even improved affordability, particularly since 2022.
Despite this, the perception of unaffordability remains strong, driven by the visibility of high prices and the challenges faced by first-time buyers. Deposits, mortgage constraints, and limited housing supply all contribute to a sense that the system is stacked against new entrants.
Addressing these issues would require a level of intervention far beyond current policy commitments. Estimates suggest that truly transforming the housing system – particularly through large-scale investment in social housing – would demand spending several times higher than current plans. Such investment could, in theory, deliver long-term benefits through improved productivity, better health outcomes, and reduced welfare costs.
There are also alternative approaches worth considering. More flexible models of social housing, where rents adjust gradually with income, could encourage upward mobility while maintaining stability. Targeted support for key workers and reforms to planning and taxation could also play a role in improving access and efficiency.
Ultimately, housing is not a single problem with a single solution. It is a system that interacts with almost every aspect of the economy and society. Reforming it requires not only political will, but also a willingness to embrace complexity and accept trade-offs.
Fixing the housing market may not, on its own, fix Britain. But without meaningful progress in this area, many of the country’s broader challenges are likely to remain stubbornly in place.
ISSN 2979-1405. Mortar & Margins is produced in Solihull by Propenomix. Its editors are Duncan Hooper and Adam Lawrence