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The UK Government recently published a White Paper on the housing market in England, describing it as “broken”.
According to the White Paper, the reason for this is very simple – not enough homes are being built, now and in the past, and supply continues to lag significantly behind demand.
Around 160,000 new homes have been built on average every year in England since the 1970s, but the actual supply needed to keep up with population growth and historic under-supply is thought to be closer to 250,000 a year on average.
The White Paper says that this lack of building isn’t due to a lack of land to build on, as only around 11% of English land is currently built on. Instead, the chronic under-supply of housing is attributed to three main causes:
These factors have combined to create a significant gap between supply and demand, which has inevitably had a knock-on effect on house prices. Since 1998, the ratio of average house prices to average earnings has apparently more than doubled, making home ownership unaffordable for millions of people.
The Council of Mortgage Lenders predicts that by 2020 only a quarter of 30-year-olds will own their own home. This is in sharp contrast to previous generations - more than half the generation currently approaching retirement were homeowners by their 30th birthday.
This is not because young people are not trying hard enough, says the report, but because it is much harder for them to get a foot on the property ladder than their parents and grandparents.
As recently as the 1990s, a first-time buyer couple on a low-to-middle income saving five per cent of their wages each month would have enough for an average-sized deposit after just three years. Today it would take 24 years. It’s therefore unsurprising that home ownership among 25- to 34-year-olds has fallen from 59% just over a decade ago to just 37% today.
England is not alone in facing these housing market issues. Industry body Homes for Scotland says that the publication of the White Paper has brought Scotland’s own housing market problems into the spotlight.
According to its figures, the total number of new homes being built in Scotland each year is still 40% down on pre-recession levels, whilst the country’s population has grown to its highest ever level.
“As Sajid Javid said, the root cause of the housing shortage is the simple fact that not enough homes have been built, and that applies equally in Scotland,” commented Nicola Barclay, Chief Executive of Homes for Scotland.
“We need to move away from thinking of housing policy in terms of election cycles and narrowly focusing on ‘affordable housing’ and instead look at the requirements for all tenures over the next 15-20 years,” she added.
“We also need to be brave about the issues that are holding housing back, like the availability of land and the provision of infrastructure, or we will never have enough homes to meet the diverse needs and aspirations of those living in Scotland,” she said.
Contains public sector information licensed under the Open Government Licence v3.0.
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