British households lose 26% of their disposable income to housing
People in the UK allocate a larger portion of their disposable income towards housing compared to their counterparts in New Zealand, Ireland, Australia, and Canada, according to think tank Social Market Foundation (SMF).
A study conducted by SMF and funded by the Nuffield Foundation, which aims to provide a comparative analysis of housing metrics across these English-speaking nations, has revealed that the UK is lagging in key areas such as the percentage of disposable income spent on housing and the proportion of the population on social housing waitlists.
British households spend approximately 26% of their disposable income on housing, which is higher than the 24% observed in both Australia and Canada. However, when considering a broader range of indicators, the UK ranks in the middle, with an average position of 3.3 out of 5.
The report also points to significant challenges faced by the UK, including a high social housing waiting list, with over 1.2 million people or 4% of households awaiting social housing, high levels of homelessness, and general housing costs. Compared to English-speaking countries and much of Europe, the UK has lower homeownership levels.
The SMF suggests that there is much to learn from international approaches to housing policy, as countries within the English-speaking world have adopted diverse strategies to tackle similar housing issues, such as Australia’s investment in affordable and social housing through the Housing Australia Future Fund and Ireland’s focus on rent reduction and the prevention of public land sales.
“There is no doubting the hardship and frustration felt by British people locked out of the housing market,” said Aveek Bhattacharya, interim director of the Social Market Foundation. “But our situation is not uniquely different to other English-speaking countries. The likes of Australia, New Zealand, Canada and Ireland face similar problems with expensive housing, homelessness, and falling home ownership rates.
“We perform worse than them on some metrics, but better on others. That creates a valuable learning opportunity – to get to the roots of our common dysfunction and to learn how economies and societies facing similar challenges to ours are addressing them.”
Catherine Dennison, programme Head at Nuffield Foundation, echoed Bhattacharya’s sentiment, highlighting the importance of leveraging international experiences to inform effective housing policies in the UK.
“The next UK government will need to confront a long list of challenging issues on housing,” Dennison said. “The SMF’s analysis demonstrates that many potential policy solutions have been tried internationally, and there’s a lot to gain from learning from their experiences.
“The foundation is funding this project ahead of the general election, to ensure that political promises are grounded in robust evidence and subject to expert and voter scrutiny.”
Want to be regularly updated with mortgage news and features? Get exclusive interviews, breaking news, and industry events in your inbox – subscribe to our FREE daily newsletter. You can also follow us on Facebook, X (formerly Twitter), and LinkedIn.
