The Guardian reports figures comparing the cost of housing in the UK with costs in the USA.
The Social Market Foundation conducted a study comparing the living standards of UK and US households, focusing on the economic development of both countries over two centuries. Here are the key points:
- US vs. UK Wealth: On average, a US household is about a third wealthier than a UK household. A significant factor in this difference is the cost of housing.
- Housing Costs: Homes in the US are around 40% cheaper per square metre compared to the UK. This allows Americans to afford larger homes for the same price that Britons would pay for smaller accommodation.
- Living Standards Over Time: For over a hundred years, the UK has been lagging, with a standard of living per person approximately 30% below that of the US.
- Productivity Gap: Since the 2008 financial crisis, the productivity of UK workers (output per hour) has fallen behind the US. The US has seen a 22% improvement in worker productivity post-2008, compared to just a 6.8% boost in the UK.
- US Healthcare Costs: Despite Americans earning more, they end up spending a significant amount on health insurance, which, according to the report, offers a lower quality of service in some respects than the UK system. The UK spends 53% less on healthcare per person, yet offers a more consistent and effective healthcare service.
- Transportation Expenditure: The US spends more on public transport services which offer lesser value compared to the UK. Americans tend to spend more on bigger cars, resulting in slower average travel speeds and higher road fatalities than in Britain. On average, a US citizen spends $3,842 on transportation, whereas a UK citizen spends $2,532.
- Critical Analysis: Both countries show areas of inefficient spending. In the US, resources are arguably wasted on a costly health system and larger private vehicles. Meanwhile, the UK’s inefficiency is seen in the housing market, making it harder for residents to afford homes.
- Conclusion: While healthcare and transport spending reflect societal choices in the US and UK, the housing disparity in the UK is a direct result of inefficiencies in its housing market. To address this, the UK needs to focus on increasing the size and quality of its housing stock.
For investors, understanding these economic and societal disparities can provide context for property investment decisions in either country.