The hidden link between CANZUK and UK housing affordability

By Ted Cussans

Ted Cussans explores how CANZUK could impact housing affordability, linking global trade policy with local urban life across four Anglosphere nations.

Canada, Australia, New Zealand and the United Kingdom are four countries bound by common values, culture, language and interests. These four countries make up the acronym ‘CANZUK‘ and have been proposed as the basis for a free trade and free movement area between the nations. CANZUK would also aim to deepen military and defence ties, aligning foreign policy more closely in an increasingly turbulent world. In an era where the Trump administration altered the direction of the global order towards protectionism, building on relationships that have long been healthy and prosperous could be a lucrative idea. Together, these CANZUK nations have a combined GDP of $6.8 trillion USD. Public support for CANZUK is certainly present. Kolosowski Strategies found that 94% of Canadians support CANZUK, with significant bipartisan backing. CANZUK has been endorsed by new Canadian Prime Minister Mark Carney during his Liberal leadership debate. The Australian Free Trade Agreement with the UK (AUFTA) is already in place, lowering and removing tariffs on 99% of goods from the UK to Australia. New Zealand and Australia have a ‘Closer Economic Relations’ (CER) agreement, which is a free trade agreement. Expanding a free trade and movement area between the four countries would take these alliances and relationships to the next level.

Bound by a shared language, Westminster-style parliaments, similar legal systems and comparable social values, the potential for cooperation is arguably greater than within the EU, which comprises 450 million people speaking 24 different languages and adopting varied social norms and legal structures. The opportunities that CANZUK presents for a total of 112.3 million people are potentially world-changing and exciting.

The UK is unique among these countries for having an incredibly high population density, at 287 people per km2 versus Canada and Australia with about 4/km2. The CANZUK opportunity which would come with a partnership which covers nearly 10% of earth’s landmass brings potential and incentives for economic migration and prosperity shared across the globe. The challenge of achieving this comes as America has sought to upend its long running relationship with its closest ally Canada by placing a 25% tariff on Canadian goods. This opportunity also presents a challenge to CANZUK, as there are fears the US will not play fair or want to enter trade deals to external free trade areas with allies which threaten the inward looking unipolarity of the US after being “ripped off” by cheap imports, according to Trump.

If we approach CANZUK in isolation and as a theoretical international concept, I would like to look at what this might mean specifically for the UK’s housing crisis. NimbleFins is a company that researches household budgets using the office for national statistics data and finds that the average UK household budget each month sheds up to 42% on rent, or 61% on paying off a mortgage. These high numbers eat into people’s monthly budgets and the symptoms of a lack of disposable income include cutbacks in areas such as energy, food, recreation and clothing. On the worst end of this housing crisis is food bank use and homelessness. These symptoms are a result of a low supply of housing. England alone would need to build 3.4 million homes today just to be in line with the EU average of houses per 100,000 people. In London, housing affordability is so steep that medium house prices are 12 times the median annual income.

The Town and Country Planning Act of 1947 changed the perspective towards development, where pre 1947 the expectation was that building was mostly allowed unless specifically said otherwise, to a system where development is generally prohibited unless specifically allowed. Following on from this legal NIMBYism into the 1950s, green belts were born with the aim and purpose of containing sprawling urban areas. This system allowed a fair and steady increase in housing supply, up until the 1980s when the permitted building areas started to fill out and the housing supply only increased between 0.5%-1% per annum, a rate far behind western Europe, meanwhile the population continued to steadily increase. In 2008, the Economic Journal found that 35% of the average house price was directly attributed to planning constraints brought in since 1947. This comes after the expansion of the green belt; in 1979 5.5% of the land in England was green belt, and by 2022 the green belt in England had increased to 12.6%. The housing supply in the UK has become inelastic compared to an increasing population. Since the 1980s, owning a house has become more expensive and less achievable, and during this time houses have even gotten smaller.

However, if we are to pursue CANZUK as official foreign policy, then should we expect a relief on housing as more land becomes available in countries that have become more accessible to move to and live in? If we look at each CANZUK nation state individually, it becomes obvious that our housing quandary is seemingly an Anglosphere error formed through an archaic planning tradition.

Canada

The recent federal elections in Canada saw the Liberal incumbent leader, Mark Carney, remain as Prime Minister. Carney now has a fresh mandate to govern and fulfil his manifesto pledge of doubling housing starts to 500,000 per year. Like the UK, Canada has not increased its housing supply in line with population growth, despite being 41 times larger than the UK. In 2021, the average household income post-tax was CAN$88,000, while the average house cost CAN$713,500 — over eight times more. The situation is even worse in major cities: Calgary saw house prices rise 15% in 2024. In Toronto, it takes an average of 20 months to gain approval for new developments, and municipal fees range from CAN$43,000 to CAN$90,000. The average share of disposable income spent on home ownership in Toronto is 66.1%, indicating a housing predicament similar to that in the UK.

Australia

Australia, another major economy with great potential, has similarly failed to build enough homes. Data from property analytics company CoreLogic shows that the average Sydney home costs 1.2 million Australian dollars (£570,000). House prices have soared by 39.1% over the past five years. According to a 2024 State of the Housing System report, the average Australian prospective homeowner now takes about 10 years to save the 20% deposit typically required. The NSW Productivity Commission found that in 2022 the average Melbourne apartment sold for $672,000. Basic construction costs were $544,000, with the remaining 19% of the price attributed to planning regulations such as height and floor area ratios. In 2022, Knight Frank reported that 37% of the cost of purchasing a property in Sydney resulted from planning restrictions, usually imposed by local councils. This contributes to overcrowding, longer commutes and higher living costs. This poses a dilemma for CANZUK: freedom of movement often leads to population concentrations in urban areas. Without planning reform, free movement could worsen the problem.

New Zealand

New Zealand faces many of the same housing challenges. Its land mass is only 10% larger than the UK’s, and geographical features such as mountains and seismic risks restrict development. A quarter of residents are cost-burdened, spending over 40% of income on housing. Since the 1980s, house prices have risen from two times the average income to nine times.

Planning laws, including the 1977 Town and Country Planning Act and the 1991 Resource Management Act, limited building, especially in urban areas. Some liberalisation occurred after the Christchurch earthquake in 2011, when emergency powers enabled denser building. This helped moderate prices locally. Auckland’s Unitary Plan and national bipartisan legislation in 2021 have moved to upzone land and allow townhouses, though local resistance remains. Despite obstacles, New Zealand illustrates how bold policy can help address affordability.

A path forward for CANZUK and housing reform

Overall, CANZUK has so much potential to bring to the world, by building on relationships regarding trade, free movement and defence. Unfortunately, all these countries struggle to some extent with housing. If we do not tackle these barriers to planning and home building first, then we will continue to see large portions of household income absorbed through rent and mortgages. However, the potential that may come with free movement of labour is exciting as this could help create a demographic builder’s boom, as long as common standards are agreed upon which in turn could lead to a more efficient development in the UK’s housing market through a surplus of labour. But this will only be possible if we choose to reform a planning system that is a relic of a bygone era.

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