British low to middle income families are thousands of pounds worse off than the Germans, French and Dutch due to “sky high” housing costs.
Lower income households in the UK typically spend 40 percent more of their incomes on housing than those in other developed countries, according to research by the Resolution Foundation.
As a result, the poorest British families are 21 percent worse off compared to the Germans, which equates to £2,300 a year.
It says the gap with the Dutch is even higher at 39 percent, while the gap with poor French families is still a significant 8 percent.
Poorer families in Italy face an even greater squeeze with figures showing there were some 19 percent worse off than those in Britain.
Concerns about high house prices in the UK have triggered a pledge by Labour to remove many planning controls in an effort to build 1.5 million more homes by 2028.
However, there are doubts the UK has the workforce or materials needed to meet this target. At the same time, ministers face opposition from many communities to new housing estates.
The Resolution Foundation analysed figures on household spending power among countries in the OECD club of developed nations, adjusting them to take into account the real-life spending habits of lower-to-middle-income families.
As a result, it concluded that official figures “understate how expensive Britain really is” for low-to-middle-income families.
For example, poorer households tended to spend 9 percent more of their budget on housing costs and 4 percent more on food than wealthier people.
At the same time, housing in Britain is around 44 percent more expensive than in the average OECD nation.
It said this “more than offsets” the benefit British families receive from lower food prices, thanks to a highly competitive groceries market.
Simon Pittaway, senior economist at the Resolution Foundation, said Britain’s high housing costs are “a major driver of child poverty”.
He added: “Britain’s recent toxic history of low growth and high inequality has left low-to-middle-income families far poorer than their counterparts in Western Europe.
“These damaging income gaps are even worse once we factor in the prices of goods and services that matter most to these families.
“While food and clothing are relatively cheap, the sky-high cost of housing – which accounts for almost a quarter of all spending by lower-income households – makes Britain a particularly pricey country for poorer families.
“The crisis needs to be tackled urgently – from building more affordable homes to providing better support for low-income renters.”
The house building drive is being led by Deputy PM Angela Rayner. Earlier this month, she told MPs on a parliamentary committee: “Even if I and this government achieve this 1.5 million homes target, it is a dent in what we need to achieve as a whole country to deliver the houses that we desperately need.”
Analysis by the Centre for Cities has argued that building levels would need to be significantly higher than even Labour’s target to reach parity with other European countries in housing supply.
The think tank estimated in 2023 that Britain had amassed a “backlog” of 4.3m homes when compared to the building rates of neighbours such as France.
This would take 25 years to clear, even if building reached 442,000 homes annually.
