02The geography of private housebuilding since 1946
The first two hypotheses of the report concern the history of housebuilding and the geography of new supply:
- The slow decline in private housebuilding from the 1960s to 1980s was primarily a decline in Shire/rural areas, despite suburbanisation.
- The immediate decline in private housebuilding after the introduction of the Town and Country Planning Act 1947 (shown in Figure 1) was primarily a decline in the big cities, and the subsequent increase in demand to live in London from the 1980s was not reflected in an increase of housebuilding in the Capital.
The Shires had higher private housebuilding than urban areas
Figure 2 shows housebuilding in Shire areas from 1946 to 2022 strongly resembles the national pattern in Figure 1 after 1946. After spending the early postwar years suppressed at very low levels, private housebuilding underwent a large boom in the Shires from 1954, when Harold Macmillan relaxed building licenses that imposed discretionary rationing of materials for private developers.7
Private housebuilding peaked at 1.9 per cent growth per year in 1964 (146,000), before declining alongside council housebuilding in the 1970s. After a smaller boom in housebuilding through the 1980s, since 1990 private housebuilding has stagnated at an average of 0.6 per cent growth per year (97,000 in 2022).
Figure 2: Private housebuilding in the Shires after the TCPA 1947 peaked in the 1960s and has fallen since
Although public housebuilding was important in the Shires in the very early years of the postwar period, private housebuilding took on a more significant role from the late-1950s. Across this large part of the country, housing conditions improved over the following decades thanks primarily to efforts by private housebuilders.
In contrast, Figure 3 shows that private housebuilding has been much lower in Metro areas than in the Shires since 1946. Even though the rise-and-fall of private housebuilding occurs over a similar time frame to the national story, private housebuilding in the big cities outside London before the 1980s was barely half of that in the Shires, peaking at 1.1 per cent growth in 1965 (45,000), before falling to an average of 0.5 per cent since 1990 (25,000 in 2022).
Figure 3: The big cities have had low private housebuilding since 1946
In contrast to the Shires, public housebuilding was much more important in urban areas right through to the 1970s. As Restarting housebuilding II explains, this was the intentional outcome of a shift in public housebuilding to focus on improving housing conditions in places where the market did not have strong incentives to build. The slum clearance programmes required extensive demolitions that reduced the net increase in stock below what is shown in the chart on gross housebuilding in Figure 3.
In London private and public housebuilding were even lower than in Shire and Metro areas, as Figure 4 shows. Despite significant public building, the capital did not have the same housebuilding boom experienced in the rest of England from the late 1950s to 1960s, with a peak private housebuilding rate of only 0.6 per cent reached in 1955 (14,000) – the same year the green belt was introduced.
Figure 4: London has had very low housebuilding since for the past 70 years
Figure 4 is particularly noteworthy as the demand for housing in London changes over this period. While London from the 1940s-80s is shrinking due to suburbanisation and the removal of “overspill” population to New Towns, with many parts of Inner London left depopulated and dilapidated, the shift back towards London being a high demand, and an increasingly expensive city, from the 1980s onwards did not prompt more than a minimal response in private housebuilding.
Between Shire and urban areas – and even within urban areas that contained greenfield sites on the edge of town – there were big differences in private housebuilding after 1946, and particularly from the 1950s to 1970s. The differences in peak annual growth rates may seem small, but over the entire 76 year period they add up – the total growth in dwelling stock delivered by private housebuilding from 1946-2022 in the Shires was 119 per cent (6.7 million); in Metro areas it was 58 per cent (2 million); and in London it was just 37 per cent (762,000).
The overall lesson is that the history of the national housebuilding crisis has a geography. Even though housebuilding is now low almost everywhere, the barriers in Shire and Metro areas and London are different and were erected at different times. Increasing national housebuilding will require distinct approaches in different places.