Traditionally, housing is considered unaffordable (especially in the UK and US) if people spend more than 30% of their income on it. But the lack of context around household income level can make the measure less astute. The inclusion of higher-wage households spending over 30% of their income on housing may conceal more robust connections between unaffordability and health for lower-income families, who struggle more to meet all their basic needs when faced with higher costs.
We used the traditional 30% measure alongside the 30/40 measure, which considers housing unaffordable when someone is in the bottom 40% of the income distribution and spends over 30% of their income on housing. As far as we know, this was the first time anyone had compared these housing affordability measures in one paper.
Background
In the early 1980s, the UK government fully embraced giving people the ‘right to buy’ their council houses. This policy decision coincided with a steep decline in the construction of new council houses. As a result of less social housing development and restrictive land-use policies, the housing supply could not match the increase in demand. The subsequent lack of housing contributed to market volatility and the United Kingdom’s housing crisis.
Demand has continued to outstrip supply, and in recent decades, house price-to-income ratios have increased significantly. In the early 1990s, the average house cost roughly three times the annual average wage —but by 2021, it was almost nine times the average salary. First-time buyers, renters, and people on lower incomes have been particularly affected by rising costs.
Using the data
We used the first wave of Understanding Society, collected in 2009-11, which asked people a range of questions about their health, enjoyment of daily life, and if they have felt under strain. We considered their sex, ethnicity, housing tenure, age, and whether participants lived in an urban or rural area (based on a population of more or less than 10,000).
What we found
Whether we used the 30% or 30/40 measure, living in unaffordable housing was associated with worse mental, physical, and general health. However, the 30/40 measure showed stronger links between unaffordability and poor health than the 30% measure. The 30/40 measure more effectively honed in on people with lower incomes, while the simple 30% measure included people with higher incomes, who typically enjoy better health than people on lower incomes.
The relationships between housing unaffordability, health, ethnicity, and housing tenure are complicated, though. According to both unaffordability measures, a larger proportion of Black and Asian study participants lived in unaffordable housing than White study members. However, one finding which surprised us was that there were weaker associations between housing affordability and health for some minority groups than for White participants.
This result could be attributed to the small health disparities among minority participants between those with affordable and unaffordable housing in the sample. It may also be that housing affordability holds a smaller share of influence on minority participants’ health than White participants, meaning the effect of housing alone was less relative to other challenges faced.
The findings on renters were another surprise. Health was more frequently linked to unaffordable housing for private renters than for social renters. At the same time, there were stronger connections between affordability and health for homeowners than for those who didn’t own homes (private renters, people in social housing) despite social renters having worse physical, mental, and general health than homeowners.
Our overall finding that higher unaffordable housing is associated with worse health is consistent with previous research —but the results on minority groups and housing tenure are unique, and more research is needed to unpick what’s going on.
Limitations
The Understanding Society data are detailed, representative of the UK population, and contain enough detail on ethnic minorities to be ideal for this research. Still, we had to exclude some people for whom we didn’t have complete financial and health information or details on other factors we considered (age, ethnicity, etc.). Our final sample of over 35,000 people was large, but older than the people we had to exclude and slightly older than the UK population as a whole.
We can’t be sure that participants’ health issues were caused by their housing or by other factors in their lives, such as diet and exercise. Similarly, there is the possibility of reverse causation —that instead of unaffordable housing causing worse health, deteriorating health actually made it more difficult to afford one’s housing. We also could not determine whether someone had affordable rent but lived somewhere overcrowded or was unable to afford other bills.
Finally, while the 30/40 measure is more nuanced than the simple 30% one, it holds limitations too. For instance, people in the 39th percentile and those in the 41st percentile spending thirty percent of income on housing may face very similar financial challenges. Yet, the measure assumes no one above the 40th percentile of the income distribution is in unaffordable housing.
Policy implications
Nevertheless, our overall finding shows a link between unaffordable housing and poor health and helps demonstrate the value of incorporating household income levels into affordability discussions. Governments should be committed to increasing the amount of housing in order to tackle high housing costs and improve market competition.
Building up the housing supply can be done through more investment in social housing and less prohibitive land-use policies, and there are distinct benefits to a more developed social housing network. More social housing can protect countries against volatile house prices and against the kind of housing crisis we saw in 2008.
The private sector is shielded from public sector competition when social housing availability is limited, making the market less stable. With universal access to a steady supply of social housing, private and public rentals can compete directly against each other, resulting in greater price stability over time.
Authors
Will Raderman
Will Raderman is an Employment Policy Analyst at the Niskanen Center think tank in Washington DC
Nina Rogers
Nina Rogers is a Research Associate at the MRC Epidemiology Unit in the University of Cambridge School of Clinical Medicine
Emily Murray
Emily Murray is Senior Research Fellow at University College London Department of Epidemiology and Public Health
