The National Housing Federation reports that 3.7 million young people will be forced to live with their parents as housebuilding and wages fall behind, failing to keep up with the rising population. House prices in England will rise by 42% by 2020 and rental properties will rise further, National Housing Federation warns of the ‘colossal strain’ facing the generation born in the 1990s.
By 2020, the price of a first-time buyer’s home will increase by 42%. Although wages for 22 to 29-year-olds are likely to increase by 36% by 2020, this poses a significant challenge for those wishing to be homeowners. Low-earning young people would have to spend 16 times their average wage to buy their first home reports the National Housing Federation. National Housing Federation research shows that private rents are likely to be broadly stable, but could increase sharply, by about 6% a year, as interest rates and house prices rise. In 2020, rents are expected to be 46% higher than in 2013. However, when the new flood of young adults born in the noughties starts university or a new job, they could push rents even higher in a country already chronically short of decent housing.
The National Housing Federation figures chime with research by estate agency Savills, which last week revised its forecast for house price growth in the UK over the long term. It predicted that house prices would rise by a further 18% by 2019, compared with its forecast for 11.5% growth just nine months ago, as the turnaround in the property market has gathered pace faster than previously expected.
An additional report from housing charity, Shelter blames the situation on the chronic shortage of housebuilding in the UK. It suggests the solution should be a massive programme of garden cities and new towns across the south of England. ‘We should be building 250,000 homes per year just to meet newly arising need, let alone start tackling the backlog, but in England, we’re currently delivering less than half that amount each year,’ said Shelter’s head of policy and research, Roger Harding. Despite the Help to Buy scheme announced in the budget earlier this year, Shelter warns that the amount of cash set aside for affordable housing is shrinking. Shelter said short-term measures by the government could help boost housebuilding by 50,000 units a year, but says that over the long term Britain has to establish more new towns and garden cities to provide another 43,000 homes a year.
The National Housing Federation, which represents housing associations, said that current policy measures had the potential to make matters worse for potential young buyers, ‘making mortgage deposits cheaper to aspirant homeowners without increasing housing supply doesn’t tackle the root of the problem. It simply risks creating another housing bubble where prices are pushed up. These sticking-plaster answers will not heal our critically injured housing market’.
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