Written by:

Victoria Winckler
Director
The Bevan Foundation

 

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On virtually every measure, Wales is in the midst of a housing crisis. House prices are out of reach of a growing number of households – in 2022, an average full-time employees in Wales needed to spend 6.2 times their earnings on purchasing a home. This compares with just 3 times average earnings in 1997. Homes are especially unaffordable in the Vale of Glamorgan, at 9.5 times average earnings, and in Ceredigion, at 8.3 times average earnings.

With home ownership se now a pipe dream for those on lower earnings, the private rented sector has boomed. In just ten years, 46,000 households have begun to rent from a private landlord – it’s equivalent to the entire population of Torfaen becoming tenants (or contract holders as they are now known).

And as demand has surged so too have rents. According to the Office for National Statistics, private rental prices in Wales increased by 7.1 per cent in the 12 months to December 2023 – the highest increase of all the countries in Great Britain. Rightmove estimates that the average asking rent in Wales is now over £1,000 a month, with an average of 25 enquiries for each property to let across GB. Given that median earnings are £2,340 a month gross, it is extremely difficult for anyone earning less than this to find and afford a home to rent.

Nor is the social rented sector able to cope with demand. It’s now the smallest housing sector in Wales with around a quarter of a million homes. Hardly surprisingly, most people live in them for life, with relatively few coming up for letting each year. Waiting lists are at record lengths, and the chances of anyone without significant housing needs getting a socially-rented home are close to zero.

Underlying the crisis we face today is the fact that there are simply not enough homes for Wales’s population. For more than a decade, not enough new housing of any kind has been built. The number of new properties being completed peaked in 2013/14, and has never since returned to that level. There was inevitably a big dip as a result of Covid-19, and while the numbers recovered slightly in the subsequent years there are still far fewer homes being built than we need.

The figures just released by the Welsh Government for April to September 2023 show just how parlous the position is.  In those six months, a grand total of 2,108 new homes were completed across the whole of Wales, threequarters of them in the private sector. To put this into context, over the same period more than 9,000 people were placed in temporary accommodation such as bed and breakfasts, hostels and, in Cardiff and Swansea, disused offices and shops, because they were homeless.

Against this severe shortage of housing, any underuse or loss of residential stock is cause for concern. Astonishingly, the 2021 Census revealed that one in twelve dwellings in Wales (8.2%) are unoccupied – some 120,000 properties. Of these, some are second homes or holiday lets but the vast majority (around 100,000) are described as ‘truly vacant’. There are of course many different reasons why a property is empty, including short term circumstances such as undergoing renovation, being up for sale or awaiting probate. Even so, council tax returns suggest that more than 11,000 properties are currently vacant in the long term. In terms of loss of housing, the abolition of the right to buy social housing has seen a dramatic fall in the number of sales, but even so in 2021-22 some 500 social homes were sold.

The message is loud and clear: the fundamental solution to Wales’s housing crisis lies increasing the supply of affordable homes of the right type. This means making better use of the existing housing stock, for example by bringing empty homes into use and managing the numbers of second and holiday homes. It also means stepping up new builds of private and social homes. While there are signs of construction in property hotspots, there is unmet demand in all parts of Wales for homes that ordinary people can afford.

Over the next two years the Bevan Foundation will be exploring how the supply of housing for people on low incomes can be increased, thanks to funding from the Lloyds Bank Foundation and Nationwide Foundation. We’ll be looking at all options, from new build to conversions to bringing empty homes into use, and hope that readers of Business News Wales will engage with our work in the coming months.