Housing market at the point of no return
Years of not building enough homes have led to rising rental and house prices, leaving millions of families struggling to pay for their home.
The result is an unsustainable housing market which could see millions more families relying on Government support to pay their rent in the next few years.
In its Home Truths 2012 report that National Housing Federation found that the future of the housing market was looking even bleaker, with both private rental and house prices forecast to rise sharply from 2015. Private rents are now increasing at a faster rate than house prices and the knock-on cost to the taxpayer is rising as a result.
The cost of privately renting a home has risen by 37% in the past five years, and is set to soar a further 35% over the next six years. In five years that means they will be almost a third, 29%, higher than they are now.
Private rents are likely to be fairly stable through 2013 but could see steep increases from 2015 to 2018 of around 6% a year as interest rates rise and house prices increase.
Despite Government efforts to tackle public debt, it is actually spending more on housing benefit. 417,830 more working people, an 86% increase since 2009, are now reliant on housing benefit to help them pay the rising rents on their home. And this is increasing as almost 10,000 more working people every month need housing benefit to help pay their rent.
David Orr, chief executive of the National Housing Federation, said:”We now have millions of families struggling to keep on top of their rents, priced out of the housing market and nearly 10,000 more working families every month are now reliant on housing benefit to help pay their private rent.
“These people are the ‘strivers’ the Government wants to help yet their future is looking bleak.
“This cannot continue; we need action now to address the causes of rising housing costs, not just the symptoms. Only by addressing the chronic undersupply of new homes can we stem the financial pressure on families and Government.”
One in 12 families in England is on the waiting list for social housing and Orr added: “Sadly the future is looking even bleaker. Successive governments have failed to tackle the under-supply of housing and time is now running out. If we don’t urgently fix the housing market we will have a generation who are priced out of renting a home, let alone buying one.
“High housing costs put financial pressure on both families and the Government. When people can’t afford the homes they need, it stops them from moving for work, it prevents young couples starting families. Aspiration is stopped in its tracks.”
The National Housing Federation is calling on the Government and the whole housing industry to take a long-term joined up approach to tackle the market difficulties. More immediately the Government must release publicly owned brownfield land to housing associations so they can build more houses. Using the Government’s own data the Federation has identified sites equivalent to twice the size of Leicester that could be built on now.
Orr added: “Public support for building more homes is also crucial and we need to encourage their voices to be heard above those of the NIMBYs. The National Housing Federation’s new campaign ‘Yes to Homes’ will encourage more people to speak up in support of more new homes.”