Call for action on housing 'crisis'

 

Ruth Patrick lives with her partner and says she is struggling to get onto the property ladder

The housing market will be plunged into "crisis"' without government action to address the "chronic under-supply of homes", a body representing housing associations in England has warned.

The National Housing Federation (NHF) said it risked locking an entire generation out of the housing market.

It predicted further falls in home ownership rates and even higher rents.

The government says it has made more land available for building and is investing £4.5bn in lower-cost homes.

Housing Minister Grant Shapps said his plans would "get Britain building again".

"That's why I've announced plans to release thousands of acres of public land for housebuilding.

"And despite the need to tackle the deficit we inherited, this government is putting £4.5bn towards an affordable homes programme which is set to exceed our original expectations and deliver up to 170,000 new homes over the next four years."

But the NHF said this represented a cut of 63% on the previous programme of government spending on homes to rent or buy.

"What we need to do is to build new homes," NHF campaigns director Ruth Davison told BBC Radio 4's Today Programme.

"Governments of all colour have not properly understood that we in the grip of a housing crisis, and unless they do something about it an entire generation will be locked out of decent housing."

'Expensive and unregulated'

Viewpoint

Matt Griffith is renting because he cannot afford to buy his first home. He is a spokesperson for the pricedout.org group.

"It is important to remember that the decline in home ownership rates is happening overwhelmingly amongst the young.

"This is a tale of two generations. Home ownership has been growing strongly for older age groups despite the credit crunch - and is projected to reach record levels, with over 80% of pensioners set to become home owners by 2026.

"For younger groups it is the exact opposite - home ownership has slumped and current trends are making it even more of a distant dream.

"Unfortunately housing pressures have been increasingly playing themselves out in the private rented sector. Market adjustment appears to be happening through higher rents, not lower house prices. This is being reinforced by banking lending behaviour which is favouring the equity rich over potential young buyers."

The level of house prices, the need for larger deposits and stricter lending criteria set by banks, had combined to cut first-time buyers out of the market, the National Housing Federation said.

"People need much bigger deposits now, and typically people can only get mortgages of about 75% of the price of the home," she told the BBC.

Research it commissioned from Oxford Economics suggests that the proportion of home ownership in England, which has been falling steadily for the last 10 years, could decline further from its current rate of 67% to 63.8% over the next decade.

The forecasts are based on assumptions that affordability will worsen, as employment prospects and wages fail to keep up with a predicted 21% rise in house prices over the next five years.

But with rents forecast to keep rising, and more than 1.5 million people on waiting lists for social housing in England, it is also the lack of affordable alternatives to home ownership that is worrying to the NHF and others.

"Millions of people across the country remain desperate for an affordable place to live, with more and more forced into expensive and unregulated private rented accommodation," said Campbell Robb, chief executive of housing charity Shelter.

'Through the roof'

Analysis

The difficulties of raising deposits and obtaining mortgages are one side of the problem. The other is housing supply. It is, though, a bit of a catch-22.

Developers say they are willing and ready to build more homes. But they worry that they won't be able to sell them, because potential buyers will not be able to raise the finance.

The dilemma for policy makers is how to escape this damaging cycle, of restricted supply leading to high prices, which leads to curtailed demand, resulting in unwillingness to build.

The number of new homes built last year was the lowest in peace time since 1923, recent figures suggest.

"With major developers holding planning permission for at least 188,000 new homes, the government must urgently look at ways to get construction going. This will not only create jobs and drive growth but will deliver the homes people desperately need," said Shelter's Mr Robb said.

David Ritchie, chief executive of homebuilder Bovis, told the BBC that he was "frustrated by the lack of support for first-time buyers", saying the firm had itself lent the cost of deposits to help the buyers of its homes.

The NHF said the problem of unsold new homes was particularly acute among smaller one- and two-bedroom homes in city centres built in recent years.

Bovis, which has just revealed a doubling of first half profits, confirmed that it had shifted the mix of new homes it was building to larger, more expensive properties.

'Generation rent'

Oxford Economics predicts that average rents will jump by almost 20% over the next five years.

Matt Griffith of campaign group priceout.org said young people in particular now faced the "toughest housing environment in decades".

Graphic showing young household's declining home ownership

"This is producing a lose-lose for 'generation rent'," he told the BBC News website.

"Squeezed incomes from rent rises, inflation and stagnant wages are making saving for a deposit difficult.

"We have a slump in house building levels whilst government efforts to stop declines in the wider housing market benefits existing owners over those priced out of the market," he said.

Mr Shapps said that he was determined to "pull out all the stops" to help first-time buyers.

Housing Minister Grant Shapps says the coalition government's planning reforms will help the situation

"That's why I've held summits with lenders to encourage them to do more to help people take their first step onto the housing ladder, and I've launched the FirstBuy scheme as a valuable alternative to the 'Bank of Mum and Dad' for those struggling to get together that much-needed deposit."

Announced in the Budget, the £250m scheme aims to help up to 10,000 people buy their first home by helping them out with a deposit.

Those buying properties from some developers could receive a loan worth up to 20% of the value of the home from the government and the housebuilder.

Pricedout.org said only a small number of those wanting to buy would be helped.

But it praised government proposals to change the planning system to try to encourage more commercial residential housing.

The National Housing Federation also said last month's draft National Planning Policy Framework, which aims to simplify the planning system, was "a step forward".

 

More on This Story

The BBC is not responsible for the content of external Internet sites

Comments

This entry is now closed for comments

Jump to comments pagination
 
  • rate this
    +2

    Comment number 1331.

    More housing stock isn't enough. We need to stop propping up the price of houses to make these affordable again; we need to prevent the purchase of homes as investments by limiting rent; and we need to stop worrying about negative equity etc (it doesn't MEAN anything if it's not an investment!)

    Why protect investors at the expense of the most vulnerable?

  • rate this
    +4

    Comment number 1330.

    Bootrap

    "Yes, get some houses built and lots of them."

    There is nowhere else to build. Every last single scrap of land is already being used for industry, agriculture, commerce, living, roads, car parking, etc which is why they wish to build on the Green Belt.

    The Housing crisis is a mere symptom of the over-population crisis and this must be dealt with first before we can deal with the former.

  • rate this
    +1

    Comment number 1329.

    Crisis, what rubbish. In the thirties there were more rented houses than owned and one saved to buy a property. If you didnt then you still rented. In the 40s, a war but houses were still rented not bought. Fifites the council house boon, except they were still rented cheaply till it was found out they were costing the earth to renovate. 80/90s housing buy boon. Now we have closed the circle

  • rate this
    +6

    Comment number 1328.

    @ukblacksheep

    "the cult of the individual that has got us in this mess"

    No -the ridiculously exaggerated false sense of entitlement, welfare dependency, universal benefits, a bloated public sector that seeks to micromanage every aspect of its citizens lives and the huge bill to the taxpayers, etc, etc, are a direct consequence of so-called Social "Responsibility" in the name of the "Public Good"

  • rate this
    +1

    Comment number 1327.

    "Mayna
    Who sold all the gold reserves that should have been retained for such a crisis as we are now in? LABOUR!"

    The total value of that gold at today's price would be £15B. That is 10% of the public deficit, so is really peanuts. On the other hand Labour sold "air" (the 3G electromagnetic spectrum) at about the same time for £23B (way overpriced as it turns out).

  • rate this
    +3

    Comment number 1326.

    1308.Sylvia D "... children having children ..."

    To the music of a well known washing up liquid commercial...

    Child: Mummy, why are your hands so soft and so smooth?

    Mother: Because I'm only 16

  • rate this
    +2

    Comment number 1325.

    1305. parttimestudent
    Where I live there are hundreds of empty houses, because people no longer want to live in old terraces without gardens."

    Really, or because the asking prices are too high for what they are?

    I know people who live in ex-mill houses on industrial estates, because it's what they could afford. People will live virtually anywhere if the price is right.

  • rate this
    +1

    Comment number 1324.

    1301. ravenmorpheus2k
    Stop people buying and selling houses as a commodity and getting rich off the backs of people who have to rent."

    The only way to do that is to make it harder to borrow money. I'm not saying don't do that, but obviously it has its down-side as well.

    Countries like Germany are like this, which is why their rental market is so big compared to ours. But house prices don't move

  • rate this
    +5

    Comment number 1323.

    Immigration is a factor. It creates demand for housing.

  • rate this
    0

    Comment number 1322.

    "1295.ukblahblahblacksheep

    At the end of the day you are deriving surplus wealth from providing anothers basic requirements."

    So I would assume that you don't agree with shops profiting from food sales either?

  • rate this
    +1

    Comment number 1321.

    Before we write over acres of new land for housing we should tackle the issue of land banks. Releasing new land is no guarantee of more houses.
    Developers can hold onto land for years waiting until house prices rise before building on it. Perhaps there is a case for "use it or loose it" or at least influencing the position through the tax system

  • rate this
    0

    Comment number 1320.

    @1255 hope your office is clean – to keep it like that and the current housing market system you’ll be watching a makeshift slum being built on your doorstep.

  • rate this
    0

    Comment number 1319.

    1295.ukblahblahblacksheep

    Interesting thought, but if he only covers cost there is no reason to invest so why provide the BLT. Bread is also an essential, should the baker also only cover his costs? Who else shall we make a slave without hope of improving their situation?
    An investor takes a risk by investinhg (BLT or not), that is why they expect and are due a greater return.

  • rate this
    +3

    Comment number 1318.

    "1233.Shaunie Babes

    If couples waited till they could afford to have a baby very few people would"

    In that case they made a decision being fully aware of the implications and consequences so have no right to complain should they now be a victim of the circumstances they created for themselves.

  • rate this
    +2

    Comment number 1317.

    1282.David_L "The reason for high house prices is the older generation (50+) who have monopolised the market. "

    Hogwash! I wouldn't mind betting that the majority of the over 50s have lived in the same home for the last 20 years. On own street, most of the 50+ have been here for at least 15 years and many for much longer. I've seen far more younger people move in, move out, & move up

  • rate this
    0

    Comment number 1316.

    1265.
    Lord Horror
    "All methods of dealing with this ever increasing madness need to be urgently considered"

    Yes, get some houses built and lots of them. Bring costs down and cut the cost of living. Stop rip off LL, stop have government topping up rubbish wages payed by employers, give people a bit of self respect and you may just get a bit back!

  • rate this
    0

    Comment number 1315.

    @bootrap

    Why can't they get on the housing ladder? Because they don't earn enough. Why is that? Because they don't have a good enough job. Why is that? Poor parenting, not enough hard work at school, poor future planning.
    Why should everyone else fund these people's needs? Even if you chose an admirable occupation, if you knew it paid poorly that was your decision, deal with it.

  • rate this
    +3

    Comment number 1314.

    Some commenters here are blaming holiday homes for the housing crisis. I have one in South Cumbria. The property there is cheap as chips compared with London, and there is plenty of it for sale. The problem is the lack of decent year-round employment in the area. Perhaps we need a better distribution of jobs throughout England.

  • rate this
    -1

    Comment number 1313.

    Perhaps it is time that a land tax is phased in. This could reduce the benefits of purchasing a house and seems more sensible than the income tax, which penalises employment. Another benefit would hopefully be an economy less based on debt as a means to afford the almost magic deposit amount which when achieved allows home buyers to slowly gain an asset instead of losing cash.

  • rate this
    +1

    Comment number 1312.

    1295. ukblahblahblacksheep
    At the end of the day you are deriving surplus wealth from providing anothers basic requirements"

    Just like those capitalist farmers who produce food. Nasty people aren't they.

 

Page 16 of 82

 

More Business stories

RSS

Features

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.