If the UK returned to pre-financial crisis productivity levels, salaries could be up to 25% higher
England is short of 2.5 million homes and needs to build 550,000 each year from now until 2031 to address the backlog and support future population growth, according to consultant Bidwells.
The analysis, based on figures from the Office for National Statistics, form part of Bidwells鈥� new report, The Productivity Engine, which looks at the key barriers holding back UK productivity growth.
The 550,000 figure suggests Labour leader Keir Starmer鈥檚 pledge to build 1.5 million homes in Britain by the end of parliament would be insuffiicent. The Labour policy aim equates to 300,000 a year, 250,000 lower than the number Bidwells has estimated is needed to solve the housing crisis in England alone.
Bidwells report blames the country鈥檚 housing shortage on its planning system, which they say restricts supply, as well as a decline in government funding for building social housing, a steady fall in interest rates between 1985 and 2021 and financial deregulation.
Together, these factors resulted in a rise in house prices, driving the average age of a first time buyer from 26 in 1980 to 34 in 2022, the report revealed.
Constructing more houses would alleviate pressure on government funding, as state expenditure on housing benefits and the housing element of universal credit for private tenants has risen by 50% since 2019 to 拢13 billion. This accounts for a third of overall housing support.
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Affordability has attracted increasing amounts of people to the rent sector, which Bidwells demonstrated also affected productivity. The average distance in 2018 between home and work was 4.7 miles. By 2023, it was 6 miles, with just 23% living within 2 miles.
Sue Foxley, research director at Bidwells said: 鈥淭he data points directly to city competitiveness and the resulting demand for the real estate that accompanies a buoyant urban area.
鈥淎s businesses require their workers to return to the workplace, the flexibility renters have enjoyed post-pandemic will be eroded resulting in perhaps a less productive employee base, with stretched finances
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