London, Oxford and Cambridge Residents Face Steepest Housing Cost Burden in UK
Londoners are spending a greater proportion of their income on housing than residents of any other major UK city, according to a comprehensive new report that underscores the severe economic impact of the capital's ongoing housing crisis. The research reveals that housing costs are consuming an unsustainable share of household budgets in Britain's most economically successful urban centres.
Disproportionate Housing Expenditure in Key Cities
The Centre for Cities' annual cities outlook report has uncovered stark regional disparities in housing affordability across the United Kingdom. The data indicates that London residents spend an average of 19 per cent of their total outgoings on housing costs, placing the capital at the top of this concerning national ranking.
This figure represents the average across all housing tenures, with the report specifically noting that many private renters and younger homeowners in London are likely facing significantly higher proportional costs that substantially exceed this already elevated average percentage.
Following London in the rankings are two other major university cities that have become synonymous with housing affordability challenges. Cambridge residents spend 18 per cent of their outgoings on housing, while those living in Oxford allocate 16 per cent of their household budgets to accommodation costs.
These figures contrast sharply with more affordable regions elsewhere in the country. In Milton Keynes, housing costs consume just 12 per cent of household outgoings, while residents of Warrington spend only 11 per cent of their budgets on accommodation, highlighting the dramatic geographical divide in housing affordability across different UK urban areas.
Planning System Constraints Exacerbate Crisis
The report identifies Britain's restrictive planning system as a primary factor preventing housing supply from increasing in line with demand, thereby pushing prices to unsustainable levels in high-demand areas. The think tank argues that this systemic failure has created a significant drag on living standards in economically successful cities.
"As housing is the biggest component of household budgets and an essential spend, variation in housing costs has a big effect on local living standards," the Centre for Cities analysis states, emphasising how housing affordability directly impacts quality of life and economic wellbeing.
The report challenges conventional economic theory by noting that higher house prices should signal stronger demand and lead to increased housing supply, but that this market mechanism has broken down in practice across many UK regions.
"In many places – especially successful cities like London, Oxford and Cambridge – high house prices are not matched by high levels of housing supply, with the planning system acting as a key constraint on building both upwards and outwards," the analysis explains.
The uncertainty and case-by-case nature of the current planning process effectively disconnects local housing supply from demand, according to the researchers. This limitation not only affects individual households but also constrains cities' economic potential by reducing the size of urban labour markets as fewer people can afford to live and work locally.
Government Reforms Fail to Deliver Results
Despite government attempts to kickstart housebuilding through a series of planning reforms – including relaxing constraints on green belt development and reintroducing mandatory housing targets – these measures have failed to significantly increase construction rates.
The situation appears particularly dire in London, where official figures reveal a dramatic shortfall between targets and actual construction. The capital has an annual housing target of 88,000 new homes, but last year saw just 4,170 housing starts – representing a staggering 72 per cent decrease compared to the previous year's figures.
Consultancy firm Molior provides an even more concerning long-term projection, estimating that only 4,550 homes will complete construction annually in both 2027 and 2028 due to the rapid decline in housing starts. This forecast suggests that London's housing crisis will continue to intensify in the coming years without more effective intervention.
The Centre for Cities report ultimately presents a troubling picture of how housing affordability challenges are concentrated in Britain's most economically dynamic cities, with systemic planning failures preventing adequate supply responses to strong demand, thereby undermining both living standards and economic potential in key urban centres.
