Today the National Housing Federation published a damning report on England’s housing market, describing it as “distorted and dysfunctional,” with research by Oxford Economics predicting that house prices will rise by up to 40 per cent in the next five years.
Gordon Brown has already recognised the severity of the crisis, prioritising the building of affordable housing in his first legislative statement as prime minister in July.
We are so confused about housing in this country. We want to own a house not rent a flat—low density living is the norm across the UK, even in London, which is the least dense large city in Europe—but we want to preserve the green belt. And what about all those empty properties (some 700,000) and the undeveloped land the developers are sitting on? Should we continue to let City bonuses and foreign investment skew the market in the capital? Should we tax underoccupancy? Should we tackle the collapse of confidence in pensions which has encouraged the rise of the house as pension?
But is there a crisis anyway? Simon Jenkins reminds us that the key figure for first-time buyers is not the purchase price of a house, which they will probably sell long before they have paid for it, but the cost of the monthly mortgage repayments. Median housing payments for first-time buyers, he says, were 16 per cent of income in 1975, 18.4 per cent in 1980, a huge 27 per cent in 1990, 14 per cent in 2000 and 16.8 per cent last year.
With interest rates increasing, however, the ratios are worsening. Over the first half of this year, repossessions have averaged 77 houses a day, a 30 per cent increase on the same period a year ago. Although the number of repossessions is still well below the levels seen in 1991, when 76,000 properties were repossessed, at a rate of 208 every day, the trend is worrying.
Look out for a forthcoming blog series in which Harvey Cole dismantles some myths surrounding our housing market.
You’re scratching the surface. The ridiculous ‘offers over’ bidding system that we have in Scotland makes the overall median price of property here look far lower than it actually is. A flat in Edinburgh, selling for ‘offers over’ £150,000 can easily fetch £250,000, and to be honest a figure of £300,000 would hardly raise an eyebrow. The truth is that the average price in Edinburgh, and in Glasgow (some parts), and in Perth, and in many other areas is far higher than the published figures because the figures are all based on the ‘offers over’ price being the actual price of the property. It is just impossible for first time buyers to buy in many cities and towns, and no easier in the countryside.
When affordable housing is made available, the high Council Taxes in many areas of Scotland, around £2,500*, inclusive of water and sewage, for band F, has made that affordable housing unaffordable. The situation, in some parts of the country, is at the very least ‘distorted’ and ‘dysfunctional’.
*It doesn’t help that all new builds are being rebanded by stealth and that their Council Tax band is based on their current value, rather than by the proper method of working out what they would have sold for, in good repair, in 1991.
Many of the ‘we’ who want to own a home would actually prefer to be able to rent a mansion-type flat on a long lease, at a reasonable rent, in a block built for letting, as one is able to in Italy and elsewhere.
Here, if one does not qualify for social housing, buying is the only option, whether one is obsessed with ownership or not. [I overheard a women on a bus telling her friend that she wanted a Housing Association flat, and wasn't interested in 'the right to buy', but in a secure tenancy.]And of course the British are obsessed, because it relates to social class. The ‘housing ladder’ is a creation of the media in collusion with developers - in London, the Evening Standard is the worst culprit in promoting housing ladder envy, and buy-to-let one upmanship. I would like to strangle those smug couples who simper ‘we’re thinking of getting a buy to let.’
“We want to own a house not rent a flat—low density living is the norm across the UK, even in London” - trying to buy a house in London may be an upward climb if you are not financially capable.