Why does the Anglosphere Suck at Housing?

Speaking English is part of the problem

Welcome back to Home Economics, a data-driven newsletter about the American housing market. Today’s article is about why the Anglosphere (the United States, Ireland, and the UK and its former colonies) can’t seem to build enough housing to contain rapidly rising home prices.

A delightful podcast about this article and the broader housing affordability issue sits below the paywall at the bottom of this article. Subscribe/upgrade here:

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Home Prices Surged Across the Anglosphere

Home prices are going up around the world. But they’ve gone up especially quickly in the Anglosphere. Prices in these countries have risen faster than in the best comparables (the set of non-English speaking countries in continental Europe).

They’ve all failed to build fast enough

It’s not immediately clear why speaking English leads to higher home prices. John Burn-Murdoch, chief data reporter for the Financial Times, suggested recently that it’s a failure to build housing that unites these countries.

Cultural explanations

In Burn-Murdoch’s view, the culture the UK bequeathed to its colonies was anti-density and anti-development: a disdain for apartments, a penchant for overly complex planning systems, and a concern for the natural environment that backfires in the form of regulations that promote low density, car-dependent sprawl (and provides a convenient excuse for NIMBYism).

These are worthy arguments and I recommend you read the article in full (and all of John Burn-Murdoch’s work—a portfolio of outstanding data journalism). But it overlooks an important factor: immigration.

A complication: the per capita part

If housing per capita is the measure, the Anglosphere has unarguably turned in a dismal performance. But to what extent is this a function of the numerator (limited new building) versus the denominator (rising population)?

Across the Anglosphere—with the exception of the UK—populations have grown far faster than in continental Europe. I think this is the most compelling link between language and housing: because English is the global lingua franca, immigrants seeking economic opportunity—whether they are from India, China, or, like my parents, Tanzania—are far more likely to emigrate to an English-speaking country.

Immigration has driven faster population growth, and weighed on housing per capita growth, across the English-speaking world.

Builders and laggards

But we needn’t give the entire Anglosphere a free pass just because they took in lots of immigrants. Some of these countries may well have failed to build, too—compounding the problem.

The chart below plots % dwelling growth against % population growth. It helps us determine which countries are failing to build enough for their growing populations, and where this might be at least partially excused because of how quickly their populations are growing.

A few things stand out.

• For the most part, the more a country’s population has grown, the more housing they’ve built. In fact, almost all countries have built housing faster than their populations have grown. This contrasts with the conventional narrative, but is substantiated by one of the only datasets about the housing stock across countries¹. Part of the problem is that most analyses look back 10 years—a period of stagnant building following the housing crisis. A longer horizon tells a different story.

• Dwellings per capita (bubble size) is particularly high amongst countries that have experienced relatively slow population growth (Portugal, Japan, Finland, Italy, etc). Dwellings per capita is low among rapidly growing countries like Ireland, Australia, and New Zealand.

• Most Anglos are laggards: all but Ireland and Canada² are close to, or below, the parity line: they’ve barely to built enough to house their newcomers, let alone to bring their housing stock into line with other similarly developed countries.

• But not all Anglos are the same: the failure to keep up is less excusable in the UK and the US than in Australia and New Zealand. The number of Brits and Americans has grown modestly. By contrast, New Zealand and Australia’s failure to build enough is at least partly explained by their populations having surged more than 30% over the past two decades.

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For paying subscribers only: a podcast discussion about this article, John Burn-Murdoch’s article in the FT, and the wider housing affordability issue…