There’s a waiting list for social housing. This could be taken as the number of people sleeping under hedges who desperately require housing at taxpayer expense. This could also be taken as being an exemplar of basic supply and demand. We can even go one stage further and suggest that it’s telling us something about the shape of the demand curve for housing.
The numbers:
There were 1.21 million households on local authority waiting lists on 31 March 2022, an increase of 2% from 1.19 million in 2020/21.
Or more recent numbers from the activists:
1.2 million households in England are currently stuck on waiting lists for a social home, a rise of 5% in the last two years.
The other numbers:
The number of people estimated to be sleeping rough on a single night in autumn 2022 is 3,069, which after 4 years of decreases has risen for the first time since the peak in 2017.
So, the 1.2 million is not those sleeping under hedges. If it isn’t, then what is it?
A reasonable definition of social housing is that housing on offer at lower than market rents. As our basic Econ 101 chart of supply and demand tells us, demand rises as prices fall. 1.2 million (minus the 3,500 if we insist) is therefore the number of people who would be willing to move in return for lower than market rents.
We can go further too. This tells us something about the shape of that demand curve for housing. Affordable housing (one component of social, but let’s run with that) is defined as being at 80% of market rents. So, a 20% price fall seems to increase demand by that 1.2 million of the about 30 million households (we might be blurring UK and England numbers here but the point still stands). A 20% change in price seems to move demand by 4%? That means that housing demand is inelastic with respect to price. Demand changes, as a percentage, by less than the percentage change in price.
That then - again from that supply and demand theory stuff - tells us that an increase in supply will have a significant effect upon price. For the same reason, demand doesn’t change that much with respect to price therefore an increase in supply will move the price more than the demand.
Building more houses therefore will indeed solve the housing affordability problem.
We could also abandon all this economic theory nonsense and just return to basic, plain, common sense. There’s a queue for cheap stuff, is there? Gerraway.