The UK housing market offers poor value for money compared with other developed countries. Typically, UK households spend much more money for much less living space. This means that the UK ranks near the bottom of the advanced economies in terms of value for money.
According to a recent comprehensive study by the Resolution Foundation, UK households spend 57% more than Austrian households and 36% more than Canadian ones for equivalent housing. Among OECD countries, only Finland has worse value for money in housing than the UK.
In fact, the average English home is only 38 sq m per person, significantly less than the 66 sq m in America or the 46 sq m in Germany. In comparison, the average dwelling in New York City is even more spacious at 43 square meters.
Obsolete and Unsuitable Housing Structures
A typical UK home is smaller than an overcrowded New York flat (43 m²). In general, UK accommodation is 24% cheaper per person than Austrian accommodation and 22% cheaper than Canadian accommodation.
On top of this, a significant proportion (38%) of UK homes were built before 1946, making them outdated with poor insulation and higher energy bills. While these older homes may have aesthetic charm, they also come with complications such as dampness.
Compared to other European countries, only 21% of homes in Italy and 11% in Spain were completed before the end of the war. The problem, according to the think tank, is that older homes are often poorly insulated, leading to higher energy bills and the risk of damp.
The Resolution Foundation's Adam Corlett has said that the UK faces a "decades-long housing crisis, with a housing stock that offers the worst value for money of any advanced economy". This is due to underinvestment and neglect, which have resulted in a shortage of quality and affordable housing options.
Although other countries such as New Zealand, Australia, and Ireland also face subpar housing value, it is a particularly significant issue in the UK due to small home dimensions and high costs.
To tackle this challenge, the UK must not only increase new home production but also enhance the quality and value of existing housing through renovation and modernization initiatives. Significant changes are required to alleviate the 'British squeeze' of high costs for limited living space.
In order to calculate the actual market cost of housing, The analysis looked at how much it would cost to rent each home, including imputed rents, or what owners would pay if they rented their property at market rates. This showed hos the price of housing varies across different nations.
Rental Costs Increased by 9%
Recent data from the Office for National Statistics (ONS) shows that rental costs throughout the UK rose sharply in February of this year. However, at the same time, price adjustments in the housing market stabilised.
Overall, the report shows that between February last year and February this year, the average cost of private renting in the UK rose by 9%. Which is higher than the 8.5% year-over-year growth seen from January to January. This marks the largest yearly rise in rental costs since tracking began in January 2015.
Currently, over 50% of rented homes located in areas where the average monthly rent exceeds £1,000. This reality underscores high demand among renters, pushing many to their financial limits.