The EDA blog has spotted a revealing piece about the unaffordability of housing:
SO, WE BUILD MORE HOMES – WHO THEN BUYS THEM?
September 15th, 2014
According to a report from the National Housing Federation, only an “exclusive members club” will be able to afford houses...
As for “affordable” homes, they should be no more than 80% of the cost of owning or renting a home on the open market.
If a home costs £200,000 and rents for £800 a month that would be £160,000 and £660 a month. But if a home costs £400,000 and rents for £2000 a month then that’s £ £320,000 and £1,600 a month. It is not based on what people can afford, just a simple mathematical formula.
So, why are we building more and more expensive properties in East Devon?
Here is the complete article:
Homeownership is becoming an ‘exclusive members club’
New report warns only well-off will be able to afford to buy.
15 September 2014
Only the wealthiest of the next generation will be able to buy a home if current trends continue, warns the National Housing Federation today, as a new report shows that first-time buyers now have to pay, in real terms, ten times the deposit needed in the early 1980s.*
Broken Market, Broken Dreams reveals that first-time buyers today have to earn more, borrow more, stump up a larger deposit and rely more on family wealth than even a generation ago.
Download Broken Market, Broken Dreams: executive summary
(PDF, opens new window)
Download Broken Market, Broken Dreams (PDF, opens new window)
The report found that:
The average first-time buyer today needs a £30,000 deposit, almost ten times* the deposit required in the early 1980s.
First-time buyers have an average income of £36,500, compared to the average salary for first-time buyers in the 1980s of £20,000*.
A first-time buyer has to borrow 3.4 times their annual income on average, compared to first time buyers in 1979 who needed to borrow just 1.7 times their income.
Two thirds of first-time buyers receive financial help from parents – a figure that has doubled in five years.
(*Adjusted to account for inflation)
As a result homeownership is being pushed out of reach of average earners including nurses, firefighters and plumbers (1). And with the number of homeowners falling and first-time buyers not getting considerably older, it indicates that the pool of those buying homes is shrinking to those with the greatest wealth.
The struggle younger generations face is being felt across the country. In separate polling by YouGov on behalf of the National Housing Federation almost 80% of people in England think it’s harder to own a home now than it was for their parents’ generation. Eight out of 10 people polled also didn’t believe any of the main political parties would effectively deal with housing.
The research also found that getting the keys to your first home now depends more on family money. Two thirds of first-time buyers now receive financial help from parents or other family members - a figure that has doubled in five years.
Younger people whose parents can’t help financially, can find themselves stuck living in their childhood bedrooms or paying high private rents that make it almost impossible to save.
The National Housing Federation also highlights that fewer first-time buyers in the future could slow down the wider housing market and make it harder for ‘second steppers’ to move up the ladder.
David Orr, Chief Executive of the National Housing Federation, said:
"With the high salary, and huge deposit younger generations now need to buy even a modest home, home ownership is quickly becoming an exclusive members club. Sadly, it will depend on the wealth of the family you were born into as much as your own hard work.
“We’ve found that eight out of 10 people don’t believe any of the main political parties will effectively deal with housing, but they still have the chance to put that right. With a bold long term government plan for house building our housing crisis is solvable. We desperately need politicians from all sides to commit to ending the housing crisis within a generation.”
Notes to editors:
UK median gross annual pay for nurses - £27,086; for firefighters - £30,315; and for plumbers and heating engineers - £27,449. Source: ONS, Annual Survey of Hours and Earnings 2013, table 14.7a.
Homeownership is becoming an ‘exclusive members club’ | Press releases | Media | National Housing Federation
The source of this piece is the housing lobby - who are naturally pushing for more housing:
Futures Forum: "More people want more homes"
Although others would question the figures:
Futures Forum: Housing crisis - what housing crisis? ... "Evidence for a UK housing shortage is hard to come by."
On the other hand, as suggested by the EDA piece, renting might be an alternative:
Futures Forum: Renting vs Buying in the South-West
But even this, as the figures suggest, is still beyond the means of many 'essential workers' in Devon:
Futures Forum: Housing: "it would be impossible to build to meet demand because there is a never-ending queue of people who want to move to Devon."
In the end, there is a lot of confusion in the debate, as highlighed in several pieces by Martin Wolf of the Financial Times:
Futures Forum: Help to Buy: housebuilders and homeowners benefit...
And now it's been revealed we are back to the boom days from before the 2008 crash:
SOUTH-WEST HOUSE PRICES HIGHER THAN PRE-RECESSION PEAK
September 16th, 2014
BBC News - Six regions hit new house price peak, says ONS
And the Catch-22: the more new, expensive houses we build the higher the figure climbs.
Greenfield sites, pretty locations in the countryside = high prices and little chance of affordable homes
Brownfield sites in urban areas = lower prices and greater chance of affordable homes
Developers prefer greenfield, bigger profits. No incentive to build on brownfield sites.
Recipe for disaster?
South-West house prices higher than pre-recession peak | East Devon Alliance
See also:
Futures Forum: "The affordable housing that's unaffordable"
.
.
.
Download Broken Market, Broken Dreams (PDF, opens new window)
The report found that:
The average first-time buyer today needs a £30,000 deposit, almost ten times* the deposit required in the early 1980s.
First-time buyers have an average income of £36,500, compared to the average salary for first-time buyers in the 1980s of £20,000*.
A first-time buyer has to borrow 3.4 times their annual income on average, compared to first time buyers in 1979 who needed to borrow just 1.7 times their income.
Two thirds of first-time buyers receive financial help from parents – a figure that has doubled in five years.
(*Adjusted to account for inflation)
As a result homeownership is being pushed out of reach of average earners including nurses, firefighters and plumbers (1). And with the number of homeowners falling and first-time buyers not getting considerably older, it indicates that the pool of those buying homes is shrinking to those with the greatest wealth.
The struggle younger generations face is being felt across the country. In separate polling by YouGov on behalf of the National Housing Federation almost 80% of people in England think it’s harder to own a home now than it was for their parents’ generation. Eight out of 10 people polled also didn’t believe any of the main political parties would effectively deal with housing.
The research also found that getting the keys to your first home now depends more on family money. Two thirds of first-time buyers now receive financial help from parents or other family members - a figure that has doubled in five years.
Younger people whose parents can’t help financially, can find themselves stuck living in their childhood bedrooms or paying high private rents that make it almost impossible to save.
The National Housing Federation also highlights that fewer first-time buyers in the future could slow down the wider housing market and make it harder for ‘second steppers’ to move up the ladder.
David Orr, Chief Executive of the National Housing Federation, said:
"With the high salary, and huge deposit younger generations now need to buy even a modest home, home ownership is quickly becoming an exclusive members club. Sadly, it will depend on the wealth of the family you were born into as much as your own hard work.
“We’ve found that eight out of 10 people don’t believe any of the main political parties will effectively deal with housing, but they still have the chance to put that right. With a bold long term government plan for house building our housing crisis is solvable. We desperately need politicians from all sides to commit to ending the housing crisis within a generation.”
Notes to editors:
UK median gross annual pay for nurses - £27,086; for firefighters - £30,315; and for plumbers and heating engineers - £27,449. Source: ONS, Annual Survey of Hours and Earnings 2013, table 14.7a.
Homeownership is becoming an ‘exclusive members club’ | Press releases | Media | National Housing Federation
The source of this piece is the housing lobby - who are naturally pushing for more housing:
Futures Forum: "More people want more homes"
Although others would question the figures:
Futures Forum: Housing crisis - what housing crisis? ... "Evidence for a UK housing shortage is hard to come by."
On the other hand, as suggested by the EDA piece, renting might be an alternative:
Futures Forum: Renting vs Buying in the South-West
But even this, as the figures suggest, is still beyond the means of many 'essential workers' in Devon:
Futures Forum: Housing: "it would be impossible to build to meet demand because there is a never-ending queue of people who want to move to Devon."
In the end, there is a lot of confusion in the debate, as highlighed in several pieces by Martin Wolf of the Financial Times:
Futures Forum: Help to Buy: housebuilders and homeowners benefit...
And now it's been revealed we are back to the boom days from before the 2008 crash:
SOUTH-WEST HOUSE PRICES HIGHER THAN PRE-RECESSION PEAK
September 16th, 2014
BBC News - Six regions hit new house price peak, says ONS
And the Catch-22: the more new, expensive houses we build the higher the figure climbs.
Greenfield sites, pretty locations in the countryside = high prices and little chance of affordable homes
Brownfield sites in urban areas = lower prices and greater chance of affordable homes
Developers prefer greenfield, bigger profits. No incentive to build on brownfield sites.
Recipe for disaster?
South-West house prices higher than pre-recession peak | East Devon Alliance
See also:
Futures Forum: "The affordable housing that's unaffordable"
.
.
.
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