Working together is key to fixing the housing crisis
Owen Woodley (pictured) is managing director at Post Office Money
Sajid Javid MP, Secretary of State for Communities and Local Government, introduced the government’s housing paper earlier this year with the statement; “This country doesn’t have enough homes”. The whitepaper proceeds to reveal the scale of the country’s housing shortfall:
“Since the 1970s, there have been on average 160,000 new homes built each year in England. The consensus is that we need from 225,000 to 275,000 or more homes per year to keep up with population growth and start to tackle years of under-supply”.
The problem lies not only with our growing population, but with our changing population. A confluence of demographic shifts means the way in which people live and work has changed significantly, yet this isn’t reflected in the properties available.
These demographic changes are well-documented. People living longer than ever before, with many of these remaining in their own homes – as evidenced by the growth in the equity release market, which saw total lending reach £2.15bn last year. At the other end of the spectrum, many younger people are settling down at a later stage. While for some this will be a matter of choice – perhaps secondary to travel – for others it will be driven by circumstance. Student debts, the high cost of living, uncertainty about their career and job prospects, have all placed pressure on first-time buyers and their ability to save for a home of their own.
However – the picture is improving, and through determination and an open-mind, more and more first-time buyers are making the market work for them. Earlier this year the Council of Mortgage Lenders revealed that the number of first-time buyers to enter the property market in the year to March had risen to 345,000 – the highest figure since 2008. However, these figures should not be misconstrued. Although these first-time buyers have made their housing aspirations a reality, the challenge remains as tough as ever.
Our research suggests that many of these will have made some form of compromise to get on the ladder – for example, with 70% of those who have bought a first home within the past two years looking to a different location to the one they had originally intended. And so we can see that first-time buyers are taking a more flexible approach in order to get on the ladder.
Solving the UK’s housing crisis requires the industry to take a leaf out of first-time buyers approach, taking a more flexible and innovative approach in the services and products they provide to first-time buyers and home movers. This means letting people borrow for longer, into later life, helping those that will struggle to raise a deposit but can otherwise afford a mortgage, and truly investing in understanding their changing needs and working to solve their challenges.
The industry cannot solve this problem alone, however. The government has already committed to building more homes where people want to live, and to diversifying the market – opening up to smaller builders and working with housing associations and local authorities. With everyone playing their part to work together – from buyers through to those responsible with providing them with homes and mortgages, we can start to address the gap between the homes we have – and the homes the UK needs.