05Housing in Britain and Europe from 1980 to 2015
In British housing policy, 1980 is considered a turning point due to the introduction of Right to Buy by the Thatcher Government.45 Substantial changes to the ownership of housing occurred with Right to Buy and housebuilding rates declined further.
The United Kingdom was not alone though. Some European countries have seen their housing outcomes stop improving or even deteriorate since 1980 as their housebuilding rates have declined. These countries, partly due to tightening planning systems of their own, are now facing similar housing supply problems to the UK.
Housebuilding rates fell across Europe
Figure 10 shows total housebuilding in Europe from 1980 to 2015, divided by tenure and showing reductions in housebuilding rates from the 1955 to 1979 period in hashed bars. There are three lessons in European housebuilding after 1980 to compare to the earlier trends of post-war housebuilding rates in Figure 2.
Figure 10: Housebuilding rates fell across nearly all European countries, but Britain is still at the bottom
First, total housebuilding after 1980 was lower than post-war rates in almost every country. The exception to this is Ireland, which is discussed in Box 7.
Second, the public housebuilding rate declined in every country in Europe.46 Neither the scale of the decrease nor the amount of social housing built after 1980 seems to determine any country’s overall level of housebuilding.
For example, Sweden still maintains a reasonable public sector housebuilding programme, but has fallen to the bottom of the table. In contrast, Austria, which is well-regarded abroad for Vienna’s social housing programme, has seen relatively high rates of housebuilding since 1980 even though public housebuilding fell, as it saw the smallest decrease in private sector housebuilding of any country in the sample.
Third, Britain remains at the bottom of the table. The average annual total housebuilding rate in the UK fell from 1.9 per cent between 1948 to 1979 to 0.8 between 1980 and 2019. In part, this was due to the end of mass council housebuilding after the introduction of Right to Buy – the public housebuilding rate (including housing associations), fell in the UK from an average of 0.8 per cent growth per year in the 1970s to 0.3 per cent in the 1980s and 0.1 per cent in the 2000s. However, it was also due to the fact private housebuilding fell, decreasing from 0.8 per cent to 0.7 per cent and finally to 0.6 per cent annual growth over the same period.
The further decline of both public and private housebuilding in the UK after 1980 broadly aligns with evidence suggesting that the discretionary planning system became even more restrictive after this date. For example, a proposed review of the green belt in the early 1980s was abandoned after a backlash from campaign groups who opposed the increase in housebuilding it implied.47 The Town and Country Planning Act 1990 is broadly considered to be more restrictive than the prior regime, with the planning reform proposals of the 1989 White Paper dropped during the legislative process that created it.48
Box 7: The Irish exception
Irish housebuilding rates were significantly above all other European countries from 1980 to 2015, particularly during the ‘Celtic Tiger’ boom period from the mid-1990s to 2008. The fact that housing is expensive in Ireland today may at first suggest housing supply has no link to affordability.
However, Ireland’s high housebuilding performance after 1980 requires context. Post-war Irish housebuilding until 1980 was extremely low. The combination of high population growth and low building rates meant that the net increase in the ratio of homes per person in Ireland from 1955-1980 was the lowest in Western Europe, as shown earlier in Figure 4.
Although the UK’s poor performance in housebuilding was paired with a head-start in homes per person compared to the European average, Ireland was the opposite – it had a huge deficit. As a result, when Irish housebuilding began to outpace other European countries in the 1990s, it was doing so from a base similar to former communist countries such as Hungary and Czechoslovakia.49
Figure 11 shows Ireland’s low ratios of homes per person in the 1980s required a housebuilding boom to catch up with the average European country.50 This convergence was never completed – by 2009, Ireland had only managed to reach British housing outcomes, which in turn had stalled since the early 2000s. Although rising supply helped improve Irish affordability from the mid-1980s until the 2000s,51 the affordability benefits of Ireland’s housing boom were also diminished by the misallocation of new dwellings to peripheral rural areas rather than being concentrated in Dublin and other growing cities.
Figure 11: Ireland’s ratio of homes per person has always been low, and is now falling
Source: United Nations, Bulletin of Housing and Construction
Following the 2008 crash, the number of homes per person has declined in absolute terms. Construction in Ireland never recovered from the country’s particularly deep recession. The Irish planning system also became more restrictive after this point, with extensive “downzonings” following the Planning & Development (Amendment) Act 2010, and the removal of over 110,000 homes from Greater Dublin’s development pipeline in the late 2010s.52
The UK’s housing outcomes are now some of the worst in Europe
European housing outcomes since 1980 have become more varied relative to the UK as housebuilding rates have changed. Figure 12 shows that some European countries, including Finland, Switzerland, and France, continued to expand their advantage in the number of houses per person relative to the UK that they were showing in the post-war period in Figure 5, but others are not.
Figure 12: Some European countries are no longer seeing housing outcomes improve relative to Britain
Finland’s performance is particularly impressive, with the number of homes per person increasing from 86 per cent of the British ratio in 1955, to roughly matching it in 1980, and then reaching 123 per cent of it in 2015. Finnish housing outcomes and its ‘Housing First’ approach to homelessness have in recent years attracted positive attention from abroad, but the underlying foundation is a plentiful supply of existing and new housing.53
Other countries have seen their housing outcomes stop improving relative to the UK. Denmark and the Netherlands are building less than they did in the post-war era. Sweden has actually built so little that the UK has started to catch up.
In part, their declining outcomes seem to stem from some similar problems to the UK. The Netherlands for instance saw both an end to its mass social housing programme from 1989, but also the imposition of increasingly tight ‘green belts’ from the 1980s onwards.54 Likewise, after the introduction of a national planning law in 1987 the Swedish planning system is considered to have become more restrictive, and Stockholm’s initial post-war “green wedges” were replaced by a green belt around the city in 1991.55
The further relative decline of the UK’s housing outcomes cannot be hidden by the growing difficulties of some European countries. By 2015, the UK’s ratio of dwellings per person had fallen to at least 7.8 per cent56 below the European average – a further decline from a 1.8 per cent deficit with the average in 1979, and the 5.5 per cent advantage that the UK enjoyed in 1955.
Britain’s housebuilding and housing outcomes declined further after 1980
Since 1980, Britain’s housing and housebuilding outcomes have fallen further behind its low base. Some European countries have seen their outcomes and build rates stagnate since 1980. But Britain’s gap with most countries widened even more after 1980, and almost all countries have better housing outcomes than Britain today.
Improving housing outcomes means adopting a policy approach more similar to these successful European countries, or at least the European average. Identifying exactly which of these countries Britain should draw inspiration from and the scale of the challenge facing British policymakers in housing policy is the subject of the next section.