For a while last year it looked as though the widening of inequalities of all kinds, which has been one of the hallmarks of the pandemic, might not extend to housing. Demand for short-term and holiday lets on platforms such as Airbnb collapsed. While this was alarming for landlords, it looked as though more property could become available for long-term residential use. In London, rents fell fast. For once, perhaps, the scales could be tipping away from the UK’s two million landlords and towards the 13 million people who rent from them.
Since this was not the kind of levelling up that ministers had in mind, the chancellor, Rishi Sunak, intervened. A stamp duty holiday was introduced and then extended, to pump up prices. A new version of help to buy was launched. Meanwhile, wealthy people saw their savings grow, as opportunities to spend money (restaurants, parties, foreign holidays) shrank: an additional £192bn was put aside in the year following the first lockdown.
The predictable result has now arrived, in the shape of a pandemic-driven property boom. Two weeks ago, the Bank of England’s chief economist, Andy Haldane, described the UK’s housing market as being “on fire”. Prices are rising at an average rate of 14.2% annually in rural locations, and 7% in cities. In one hotspot, Broxtowe in Nottinghamshire, the average house price has jumped from £234,150 to £303,780 in 12 months.
Demand for second and holiday homes is not the only reason why the housing market in such places increasingly resembles a hot-air balloon, rather than a ladder. Well-off city dwellers are more likely than any other group to have worked from home over the past year. Some are now choosing to move house, either for a change of scene or more space. But demand for holiday homes is a key factor driving price rises, and forcing local people to vacate desirable areas such as south-western seaside towns and villages so that richer visitors can take their places, either as owners or short-term renters. In Cornwall last month, there were 10,290 active Airbnb listings, but just 62 properties to rent on the housing website Rightmove across the whole county.
The housing problems faced by renters and would-be first-time buyers long predate the pandemic. The transformation of homes into assets, and of the majority of households into property investors, has been a policy of governments since Margaret Thatcher. But the economic and social upheavals of the past year have brought about a new twist, as people venture further afield to spend the money they have made on the highest-value homes in London and the south-east. Being priced out has long been understood as a generational injustice, as house prices have floated beyond the reach of young adults without inherited wealth. In the shadow of the pandemic, its geographical aspect has grown sharper too.
There are economic as well as environmental reasons to support an expansion of domestic tourism. While second homes that are rarely used are rightly viewed as undesirable, especially in locations where they cluster together, seasonal variation is part of the rhythm of life in holiday towns. But while visitors come and go, locals need homes. Ensuring that the supply of affordable housing is increased, and secured long term, must be the primary goal of any housing and planning reforms. The alternative is increasing injustice and division.