The unaffordability of home ownership is tough on families. But if a major city lacks for affordable housing, it can also negatively impact overall development.
Is it possible to read a British newspaper or UK land investment or real estate website without running into a story about the shortage of housing? If supply is so short, why aren't homebuilders responding with new homes?
In fact, discussions about the supply of housing in the UK - in London, as well as the rest of the country - are really about affordability. Currently, the woefully inadequate supply intersects with the demand line at a very high point, driving the costs of an owner/occupied home beyond the reach of the average English worker.
The most meaningful number that surfaced in late 2014 and early 2015 is the average home price-to-earnings ratio, hovering just above 5.0. As home prices rise, as they have rather rapidly since the country emerged from the financial crises of 2008-2010, the ratio gets larger if wages do not keep pace.
And wages have not kept pace. The BBC reported in January 2015 that average weekly earnings increased in 2014 by 1.6 per cent per annum, while house price increases were 7.8 per cent.
Now to be fair this ratio is not at historically high levels. It was higher (around 5.75) in 2007, the height of the last housing price bubble. Then it dropped to below 4.5 after the bubble burst in 2008, where the ratio largely remained up through mid-2013.