Housing crisis risks causing ‘demographic time bomb’, report says
High house prices are preventing a generation of people from having children and risk contributing to a ‘demographic time bomb’, think tank warns.
A new report from the Adam Smith Institute argues unaffordable housing has forced people to have smaller families and delay starting a family until later in life.
When combined with the decrease in immigration expected after Brexit and the country’s ageing population, the lower birth rate risks a demographic crisis that will see taxes increasing on working-age people in order to pay for their parents and grandparents.
High housing costs make this situation worse, argues the free market think tank.
Though rising house prices increase the birth rate among existing homeowners, they also keep people renting where they are less likely to have children.
This means the net effect of rising house prices is ‘highly negative’ on the national fertility rate.
Between 1996 and 2014, a 10% increase in house prices resulted in a 4.9% decrease in births among renters but just a 2.8% increase in births to homeowners – a net decrease of 1.3%.
The think tank estimated between 1996 and 2014 high house prices stopped approximately 157,000 children from being born — a trend, the report warns, that will get even worse without ‘radical action’ on housing from Whitehall.
The population over 85 years of age doubled between 1985 and 2010 and is expected to constitute almost 5% of the population by 2035.
This has ‘serious cost implications’ for taxpayers, with the over 85s costing the NHS three times as much as the average 65-74 year old whilst the number of working-age people for every pensioner is likely to fall from 3.2 to just 2.7 by 2037.
‘The housing crisis is a well-known immediate economic problem, but this report showcases how it is wrecking the lives of the people of this country, preventing them from having the children they want to have,’ said Andrew Sabisky, independent researcher and author of the report.
‘This private tragedy will, in the long-run, entail massive knock-on costs to public finances.
‘Housing market liberalisation is something the Government should do anyway, but this report outlines a new set of pressing reasons for it to act.’