If you want people to make more babies, build more houses

“Away in a manger, no crib for a bed…”

These days, we don’t put babies in mangers. However, we’re not doing so well in providing them – or their parents – with more suitable accommodation.

Yesterday’s UnPacked looked at the impact of our failure to build enough houses on economic growth, today we look at its impact on something even more fundamental – population growth.

It’s the subject of a piece for the Weekly Standard by Jonathan Coppage and Patrick T Brown:

“California’s birth rate has fallen every year since 2008, coinciding with the housing market’s recovery and then stratospheric liftoff following the Great Recession. The decline is found across women in all age groups, but is particularly perceptible among women under age 24, those least likely to be able to afford a house payment or to have stable housing.”

This is worrying, but unsurprising – if would-be parents can’t afford a family home then they’re less likely to start, or expand, a family. Except that rising house prices don’t always have this effect. Indeed, house price booms have previously been linked to baby booms:

“Economists have found a surprisingly strong relationship between home prices and birth rates—one study found that a $100,000 increase in the value of a home over the prior four years was associated with a 16.4 percent increase in the probability of having a child. The University of Maryland’s Melissa Kearney and Lisa Dettling of the Federal Reserve found that areas with high homeownership saw a rise in fertility when house prices increased.”

The young(ish), city-dwelling journalists and policy wonks who usually bang on about the housing crisis can easily forget that, for millions of people, rising house prices are very popular. That’s why politicians talk about making homes ‘affordable’ but never about reducing house prices – as if the two concepts were entirely unrelated.

However, the sense of financial security created by ownership of an appreciating asset doesn’t apply to renters:

“…the increased likelihood of having a child only occurred among homeowners… Renters were left out of the housing-fueled baby boom and may in fact have been less likely to have a child after a regional increase in home prices. For them, an increase in nearby home values led to higher rents, making them feel less financially secure.”

The Kearney and Dettling research quoted above found that “the impact of a house price increase on birth rates turned from positive to negative when a locality reached about 30 percent renters.”

It just so happens that in the United Kingdom, the proportion of homes owned by their occupants peaked at over 70% shortly after the Millennium – and has been in long-term decline ever since. The English Housing Survey now puts the figure at just under 63%. Unsurprisingly, the fall is concentrated among younger people, i.e. those most likely to start a family.

Coppage and Brown see the UK experience as instructive:

“In England and Wales, with a constrained housing market and high percentage of renters, researchers estimate that the rise in home prices led to 157,000 fewer children being born between 1996 and 2014.”

This is shocking. Those who resist new housing – or have speculated in it – may have saved a few fields or made few pennies, but at the expense of thinning out a generation.

As I said yesterday, poorly-planned development can be a blight on us all. Still, it is shameful that a 21st century nation, with so much land, construction capacity and design expertise at its disposal, can’t build enough affordable and attractive new homes to secure its own future.

There may have been no room at the inn for Jesus, Mary and Joseph – but at least a creative solution was found.

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This is the last UnPacked of 2017 and Peter Franklin will return with his column on 8th January. In the meantime you might enjoy the short podcasts connected with this series.

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Peter Franklin is Associate Editor of UnHerd. He was previously a policy advisor and speechwriter on environmental and social issues.

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