In my previous post, I asked a simple question: When did we stop treating a house as a home? We know the answer, of course. It happened the moment we decided that a roof over someone’s head was no longer a basic human utility, but a financial asset—a heavily subsidized, risk-free pension pot for one generation, paid for by the next.
Over the last few weeks, I’ve been running the hard data for the West Midlands in 2026, as that is where I live and our daughter turns 20 this year. The reality on the ground isn’t just a “cost of living squeeze.” It is a mathematical trap. For an 18 to 35-year-old today, the median salary is completely decoupled from the cost of survival. We have graduates starting life with £53,000 in debt, effectively paying a 9% marginal tax rate on top of standard taxes, only to find that the target deposit for a basic 2-bed terrace is inflating by £1,100 every single year.
If you lose your job—even for a few months—the Universal Credit system actively punishes you for having saved, forcing you to burn your house deposit just to pay rent.
How did we get here? And more importantly, how do we get out without crashing the entire economy?
The Generational Pulling of the Ladder
To understand the absurdity of the 2026 market, you have to look backwards. The UK housing crisis wasn’t an accident; it was an ideological choice.
In the 1950s, the average house cost about 3.5 times the average salary. A single earner could buy a family home. During the 1950’s, 60’s and 70’s the state built houses, lots of housesBy the 1990s, the dual-income household became mandatory, but a house was still somewhat tethered to reality at 4.5 times earnings.
Then came the financialization of the 2000s, followed by the “subsidized debt” era of the 2010s (Help to Buy, rock-bottom interest rates). Instead of building houses, the government pumped billions of pounds of cheap debt into a restricted market. Those already in the market used their gains to further invest and make more gains, those not yet in the market had larger and larger hurdles to overcome.
The table below shows average annual houses built, the avg population, the ratio of house price to earnings, the percentage of adults holding multiple properties and a summary of the market dynamic per decade.
| Decade | Avg. State Builds | Avg. Private Builds | Total Annual Average | Avg. UK Pop. | Price to Earnings Ratio | % Adults Multiple Properties | The Market Dynamic |
|---|---|---|---|---|---|---|---|
| 1950s | ~215,000 | ~85,000 | ~300,000 | ~51.0 million | ~3.5x | < 1% (Aristocracy / Ultra-Wealthy) | The Rebuild. State dominance. Housing was a national priority. |
| 1960s | ~175,000 | ~195,000 | ~370,000 | ~54.0 million | ~3.5x | < 1% | The Peak. Both sectors firing on all cylinders. Supply comfortably outpaced demographic demand. |
| 1970s | ~135,000 | ~175,000 | ~310,000 | ~56.0 million | ~4.0x | ~ 1% | The Slowdown. Economic turmoil reduced state borrowing, but total supply remained robust. |
| 1980s | ~50,000 | ~160,000 | ~210,000 | ~56.5 million | ~4.5x | ~ 2% | The Collapse. Right-to-Buy is introduced. State building plummets. Population growth temporarily stalls, masking the supply failure. |
| 1990s | ~20,000 | ~150,000 | ~170,000 | ~58.0 million | ~4.5x | ~ 3% (Buy-to-Let Mortgage introduced in 1996) | The Deficit Begins. Housebuilding hits peacetime lows while the population starts climbing again. |
| 2000s | ~20,000 | ~150,000 | ~170,000 | ~60.0 million | ~7.0x | ~ 6% (The BTL Boom) | The Financialisation. Population surges by 2 million. Credit is cheap, supply is constrained, and prices detach from wages. |
| 2010s | ~30,000 | ~140,000 | ~170,000 | ~65.0 million | ~8.0x | ~ 9% | The Subsidised Demand Era. Population booms by 5 million. Government pumps Help-to-Buy cash into a restricted market instead of building. |
| 2020s (to 2026) | ~40,000 | ~170,000 | ~210,000 | ~68.0 million | ~8.6x | ~ 10% (Approx. 5.2 million adults today) | The Squeeze. Slight recovery in private building, but nowhere near enough to service a population approaching 70 million. |
I’ve built an interactive tool below to show you exactly how the math shifted across the decades. Try it out:
Generational Purchasing Power
Price to Earnings Ratio: 8.5x
Buying Model: Dual Income + Inherited Wealth
Starting Graduate Debt: £53,000 Average
The deposit barrier is supreme. Homeownership largely requires two incomes plus generational wealth transfers. Wages are stagnant while asset prices inflate.
The Final Piece of the Puzzle
Just as the State stopped building houses (1980s), and the population started surging (1990s), the financial sector invented a product (Buy-to-Let) that allowed older, wealthier generations to buy up the remaining restricted housing stock using interest-only debt, this increased demand, caused prices to increase just as those holding the housing stock also experienced increase life expectancy and so held it for longer.
This is why we have a housing crisis where we have more bedrooms per capita than ever before in UK history, but young people are stuck in expensive HMOs. The houses exist; they have just been consolidated into the investment portfolios of the top 10%.
The State Building Myth (and the Municipal Solution)
We know the private sector won’t fix this. Volume housebuilders operate as an oligopoly; their business model relies on land-banking and restricting supply to keep prices high. It is better for their business to not build too many houses, as scarcity drives prices, higher prices mean more profits, which means better returns for the shareholders.
So, the inevitable cry goes up: The State needs to build! But here is the fear that paralyzes Westminster: If the state suddenly builds hundreds of thousands of homes, won’t it crash the housing market? Won’t it destroy the equity of millions of normal families and bankrupt the Treasury, just like it did in the 1970s?
Not if we do it right. And doing it right means taking the power away from Whitehall.
As I’ve argued before, the solution lies in Municipal Housing Bonds. Local councils must be empowered to act as Master Developers. They issue bonds to pension funds—who are desperate for safe, 40-year yields—keeping the debt off the national balance sheet.
Crucially, councils must build mixed-tenure estates. You sell 30% privately, rent 30% at market rates, and use the massive profits to entirely cross-subsidize 40% social rent. It pays for itself.
The “Soft Landing” Threshold
We don’t need a housing crash. A crash destroys the banking sector and traps people in negative equity. What we need is a Soft Landing—a decade where we build enough homes to keep house price growth at exactly 0%, allowing wages to slowly catch up.
The UK has a backlog of 4.3 million missing homes. Demographically, we could absorb 3.2 million new homes over the next decade and it would consume less than 0.5% of our total landmass. The barrier isn’t space; it’s logistical capacity and political willpower.
I’ve built a second simulator below. You can adjust the number of state and private homes built per year. Watch what happens to the affordability ratio. If we build too few, inflation runs away. If we build enough, we achieve the Soft Landing.
The 10-Year Housing Market Simulator
Total Annual Supply: 200,000 homes (Demand is ~250,000)
10-Year Result: Runaway Price Inflation
Affordability Ratio (Yr 10): 9.8x
A House is a Home
We have to stop treating housing as a speculative asset class. The mental health toll of precarious renting, the economic drag of young people spending 50% of their take-home pay just to avoid homelessness, and the societal rot of delayed adulthood are tearing the fabric of the country apart.
We have the blueprints. We have the financial mechanisms via municipal bonds. Is it time to let local communities build their own futures.
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