A truer picture for housebuilding stats that will surprise you

We need to talk about the main parties’ plans for housebuilding, but before we get to that there’s something important we need to discuss. Everything you thought you knew about the housebuilding numbers in this country is wrong. Quite dramatically wrong. And that has a bearing on, well, rather a lot when it comes to this topic.

I realise this is probably the last thing you need to process, with only a few weeks left until the election and rather a lot going on besides, but bear with me, because this is rather important.

Let’s start with the conventional picture most of us have in our heads about housebuilding in this country (actually in this case we’re talking about England, since most of the main statistics – and political housebuilding pledges – focus on England). It comes courtesy of a dataset published each quarter by the Department for Levelling Up, Housing and Communities.

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This dataset shows us the number of homes built in England – either housing starts (when work begins on a home) or completions (when the work is done).

Now, it’s not as if the government has someone with a clipboard going round the country noting how many buildings are being built; instead, the department uses data on building warranties (you generally get a 10 year warranty with a new home). This might all seem like too much information but, well, bear with me.

These numbers tell quite a simple story. Back in the 1960s and 70s, England was building lots and lots of homes – an annual average between 1969 and 1979 of around 260,000 – and, in some years, more than 300,000.

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But then, in the following years, the numbers dropped – and fast. They have never come anywhere close to those 1960s highs. In the past decade, between 2013 and 2023, the average number of homes being built was only 150,000 – way lower than the comparable period in the early 1970s.

Now, when you hear political parties talk about wanting to build 300,000 homes you probably wonder to yourself (I often have) about how on earth they could hit those numbers. But that’s what brings us to the main point here.

When you read in this or that party manifesto about a housebuilding target of 300,000 in England, the parties aren’t talking about the numbers you’re probably thinking about – those ones which show housebuilding at only 150,000 in the past decade. They’re talking about another set of numbers entirely.

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Because it turns out there’s an entirely separate dataset (from the same government department) which attempts to measure housebuilding slightly differently. This one counts the entire housing stock across the country – and when you know how many homes there are you can measure the change from one year to the next.

And that matters for two important reasons. First, because back in the 1960s and ’70s we weren’t just building lots of new homes, we were also knocking down lots of old homes. There were enormous programmes of slum demolitions.

If you really wanted to compare our housing availability today with back then, you really ought to adjust for that. Yet those conventional housebuilding figures do not.

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The second reason the other dataset matters is that it turns out those insurance figures the government has typically used to measure homebuilding no longer cover most of the housing market. There’s a massive gap.

All of which is to say, looking at the other dataset, and how the total number of homes changes from year to year (net addition, as it’s technically called) gives a far better picture of what’s really going on in the housing market.

And what is really going on is rather different to that conventional picture. In fact, the number of homes being built in recent years isn’t markedly lower than the comparable period in the 1970s. It’s higher!

This truer picture shows an average of 207,000 homes being added to England’s housing supply in the past decade, compared with an average of 198,000 between 1970 and 1980. It shows that actually we are building more new homes these days than we have done for some time.

You may or may not find this mind-blowing (I did when it was first explained to me by housing economist Neal Hudson but then perhaps that’s just me) but it’s certainly important. And these numbers are certainly more representative of what’s actually going on than the ones usually trotted out by journalists.

The other upshot of all of this is that those housebuilding figures each of the parties have in their manifestos look somewhat more doable than they did when looking through the other, flawed dataset. All of a sudden the gap between current housebuilding and, say, Labour’s 300,000 home target is not 140,000 but 65,000.

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Even so, it’s an open question about whether those targets are achievable. Labour have provided little extra money for housebuilding, instead committing to planning reform, which may well help, but might not narrow the gap as quickly as they hope.

Indeed, the only main nationwide party to have committed to a specific increase in council housebuilding, with specific sums, is the Liberal Democrats, who promised to spend £6.2bn on 150,000 social homes.

One thing that certainly seems to be the case is that with house prices high and immigration also at record levels, the UK will need considerably more homes in the coming years, notwithstanding the fact that the underlying picture is slightly less dire than the conventional statistics suggest.

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