It has been asserted that the number of concealed households has gone up implying a housing shortage.
Ian Mulheirn in his incisive and analytical way points out that although the number of houses where there are more than one household has risen, this does not result from a housing shortage.
Concealed households — what’s the real story?
Liam Halligan is always a man you’d want to have on your side in a debate. Unfortunately on housing he disagrees with me. But his rebuttal sidesteps the central case I’ve been making: that benign day-to-day housing costs and 25 years’ growth in the surplus stock of housing tell us that a lack of houses is not the reason why house prices have become unaffordable. He focuses instead on what increasingly seems to be the only piece of circumstantial evidence that housing shortage proponents have left to point to: the evidence of increasing numbers of ‘hidden’ households.
In practice it’s hard to see how housing supply can be the explanation when average housing costs are falling relative to average earnings almost everywhere, and stable in London.* What’s more, distributional changes like the erosion of social housing, weak wage growth for younger people, and more recently the benefits squeeze, seem like more probable causes of such a trend, and those things have a far more potent effect on affordability than changes in supply ever could.
So it seems that the concealed households argument for a shortage of houses — always somewhat tenuous because of its many possible causes — is actually an artefact of recent immigration. There is no evidence, on this simple analysis at least, to suggest that anything has changed for the UK-born population. We don’t know why these families share households and there are no doubt many different reasons. Nor do higher rates of sharing among migrants mean that everything is fine. But what this compositional explanation does imply is that housing supply isn’t the cause of the growth in concealed households.