The Homeless Postcode Lottery Could you be next?
Many people view homelessness as the result of personal failings, and consider that if the economy is going well, there is no excuse for not getting on. However these thoughts are contradicted by the facts, which show that homelessness is caused by a complex combination of a person's individual circumstances and difficult factors outside their control.
These problems can build up over years until the final crisis moment when a person becomes homeless. One such cause that Hopewiser has investigated is Structural. Structural causes of homelessness are social and economic in nature, and are often outside the control of the individual or family concerned.
Hopewiser has taken a look at freely available data on Ordnance Survey to find out if the lack of affordable housing, high house prices, high rents coupled with continuing low wages are contributing to the homeless crisis.
House Price data taken from Office of National Statistics (ONS)
Here we can see a picture of the average house price by Region in England & Wales. The most affordable area is the North East with an average price of a house at £135,000 and average wage earnings of £25,905. This is closely followed by Wales. The South East and London in particular is the least affordable with an average price of a house being £460,000 which is 340% higher than in the North East. Wages are only 143% higher leaving a large deficit to find.
If we then start to look at affordability within the lower quartile house prices, the North East remains the most affordable and London the least. However we can now see the North West has jumped up to rank the second most affordable with an average house price in the lower end of the market at £108,000. With the average lower quartile wage in the North West of £19,544 this means two people’s earnings combined of approximately £39,000 can get a mortgage of 2.7 times their salaries if they put a 10% deposit down of £10,800. Just like the good ol’ days pre 2008!
This is not the case for London. According to analysis in the Times, soaring prices and tough mortgage rules mean that first-time buyers need a salary of almost £100,000 to buy a house. The research shows that those trying to get on to the property ladder in the capital without help from their parents or other means need a salary that is six times higher than a first-time buyer in the North East would require, and four times higher than people in half of all regions in the UK.
The Rental Market
As you would expect, London has the highest rental cost in the country, but it is interesting to note that whilst buying a house in the North West is the second most affordable in the lower quartile sector, renting has jumped up to fith place. With average earnings in the North West of £26,746 and average rental of £712 per calendar month, 32% of one person’s wage is going on rent.
Does this squeeze people too hard, is it a contributing factor to young people living with parents? Is renting so precarious that if one person loses a wage, rent and bills can’t be met resulting in them becoming homeless?
There are many factors that decide why a city has a large proportion of homelessness, but has such an expensive rental market with not enough properties available, particularly in the lower quartile sector been a factor?
While the UK economy has now clearly recovered from the credit crunch, future prospects have been dampened by uncertainty following the referendum vote for the UK to leave the EU. Although unemployment has been falling, so have average real earnings - and they are not now forecast to return to 2007 levels until well into the next decade.
Whilst unemployment is relatively low in 2018, it is still a key factor in homelessness. Homeless people want to work but often face multiple and complex barriers to finding and staying in employment.
According to the ONS, for the three months ending June 2018, the highest unemployment rate in the UK was in London (4.9%) and the lowest was in the South West (2.9%).
Homeless Statistics by Region
Crisis estimated rough sleeper numbers are up by 169% since 2010.
The increase in rough sleeping in England has varied geographically. The South East of England has reported a 261% increase in levels of rough sleeping since 2010. In the past 3 years, particularly sharp increases have also been reported in the North West (+130%) and in the East of England (104%).
Most notably, after years of rapid growth, the number of Central and Eastern European rough sleepers in London fell markedly during 2016 – from 1,000 (35% of the total) in Q2 2015/16 to 721 (28%) in Q2 2016/17. This sharp reduction in Central and Eastern Europeans sleeping rough has masked an on-going increase in rough sleeping involving UK nationals which is up by 6% in Q2 2016/17 compared with Q2 2015/16).
In the UK, the vast bulk of the recently recorded increase in statutory homelessness is attributable to the sharply rising numbers made homeless from the private rented sector, with relevant cases having quadrupled over the period – from less than 5,000 per year to over 18,000.
As a proportion of all statutory homelessness acceptances, such cases had consequentially risen from 11 per cent in 2009/10 to 31 per cent by 2015/16, remaining at this unprecedented level in 2016/17.
Homelessness prompted by mortgage repossessions or by social sector rent arrears remains at historically low levels so it is stated by Crisis that “beyond doubt, statutory homelessness is now far more closely associated with ejection from the private rented sector”.
This comment substantiates Hopewiser’s findings in this report, that renting is so expensive in the private sector that a family losing one wage may not be able to meet rent and bills. This may result in eviction and ultimately becoming homeless and this can be very much related to the region you live in.