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Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
The not-so-empty nest is becoming a feature of modern life. One minute a parent is standing in their child’s bedroom, shedding a tear over the old toys and wondering whether to turn it into a study. The next, said child is back, fully fledged but with wings clipped by debt, impossibly high rents or lack of a job.
A new survey finds that a fifth of the “boomerang” generation in the UK are in their thirties. Quite a lot of parents are pleased. Their offspring, less so. The housing shortage is now an undercurrent to politics, and to economic confidence. It’s even affecting the ability to start the next generation.
The problem is most acute in cities. Property prices have risen faster than wages in Dublin, Sydney, Vancouver, New York and many more. In London, over the past 30 years, house prices have outpaced fine art. Estate agents talk about having to “drive till you qualify”, with millennials moving further and further out. Yet historically, cities have been hubs of innovation, the high productivity places where ideas are forged.
Housing shortages reinforce the feeling that life is a zero-sum game, where you can only move up if someone else stumbles. This pernicious idea saps confidence and trust in democracy. It’s rising fastest among the young, especially those in cities. Harvard’s Social Economics Lab has found that city-dwelling Americans are far more prone to zero sum thinking than those in the suburbs or the countryside. And why wouldn’t they be, if they can’t find anywhere decent to live?
The issue is increasingly affecting politics. Housing was a huge issue in Canada’s recent election, only eclipsed by Donald Trump’s threat to annexe the country. French and British people living in places with stagnant house prices were more likely to vote for the National Front in 2017, or Brexit in 2016. Even Singapore, which emphasises inclusion in public housing, is facing a younger population frustrated by long waits for flats.
When home ownership is a cultural signifier, having a mortgage is a symbol of potential, of hope. It feels that way even if the mortgage is huge and the roof needs work: partly because renting is often so insecure. Those who own property feel richer when prices rise, and resist change. But here the lines are blurring. Parents who’ve paid off the mortgage but find their kids are stuck, who might otherwise be new-build Nimbys (not in my backyard) are moving closer to Silicon Valley Yimbyism (yes to the same). Some are building up or sideways to accommodate their offspring, or ageing relative. Multigenerational living can be a beautiful thing. But not when there’s no alternative.
Lack of affordable homes is a factor in couples waiting longer to start a family. Several studies suggest it leads to fewer births. Even when both parents work, they often have to venture deeper and deeper into the suburbs to afford somewhere liveable. This can result in a longer, more expensive commute, and mean losing the support of extended family. Grandparents are less useful if they’re miles away.
The fixed supply of land is not necessarily the problem it seems to be. Offices can be converted to residential; so can empty department stores. Space can be used more efficiently by building up. Some of the most beautiful parts of London are the highest density. Georgian and Victorian garden squares, with six-storey buildings surrounding green space, pack in far more people than two-storey sprawl.
Abundance liberals argue for tearing down regulations and challenging vested interests; for bringing back the spirit of Robert Moses or Joseph Bazalgette. Prices in many cities are between two and four times the cost of building equivalent new homes, according to Sam Bowman and colleagues at Works in Progress. This growing gulf between cost and price is driven, they argue, largely by restrictions on new building. One of their suggestions for creating more Yimbys is to let individual streets vote for higher density — which if done well could actually raise property values. Urban infill isn’t always ugly; nor is height. It all depends on good design.
One of the fastest ways to meet Generation Rent’s aspirations would be to drastically accelerate downsizing or “right-sizing” by older people, to release big houses. In the UK, 1.4mn over-65s say they would like to move somewhere smaller. Governments are understandably reluctant to give tax breaks to richer older citizens, who have amassed a greater share of property wealth. But easing their move could repay itself. Perhaps “last-time buyers” should be treated the same way as first-time ones, when it comes to property taxation. That could create a ripple effect, releasing a tsunami of good family homes into the market.
In Britain, the Labour government has vowed to speed up planning decisions and build on London’s greenbelt. But it won’t meet its target of 1.5mn new homes, according to the Office for Budget Responsibility. To make matters worse, tens of thousands of homes are stuck in a pipeline because the new Building Safety Regulator is imposing complex design requirements and delaying construction by as much as 18 months.
Housing is often a backwater department in government, lacking the prominence it deserves. But when things go wrong, the effects go beyond bricks and mortar, to a whole generation’s sense of hope and security. The shortage of affordable housing, for the next generation, is a central challenge of our time.
