Tuesday, 30 August 2011


It didn't take long for my relaxing Bank Holiday weekend to recede, as I switched on this morning's Today programme on Radio 4 to hear Ruth Davison of the National Housing Federation predict that the proportion of home-ownership in the UK could plummet to 63.8% in the next decade, ( a level unseen since the mid 1980s) unless we tackle the "crisis of the chronic under-supply of new homes". The research commissioned by the NHF predicts higher rents and an entire generation "locked out of decent housing". No punches pulled there. Certainly the historically low level of new homes built last year creates a supply-side problem but in reality the demand-side has deep fractures too, most notably on affordability and the way house price inflation has out-stripped wages growth. This latter dimension of a multi-dimensional problem makes the plight of young, aspiring first-time buyers more acute as they feel compelled to rent as mortgage lenders (rightly) insist that they demonstrate an ability to pay before a mortgage is offered. Escalating rents in high demand locations have led some to forecast that rent levels will rise by 20% over the next 5 years.So "Generation Rent" face the vicious circle of having incomes squeeze as rents rise and wages fail to keep pace with rising inflation , making it hard to save for a (larger)deposit and so having to continue to rent. .......so whats the answer? Well, no sound-bites from me on a layered problem such as this but I still believe that home ownership is an emotional desire and an aspiration for most people in the UK. Demand is high and supply can be improved by more efficient planning guidelines as envisaged in the new Planning Policy Framework announced last month, and a move away from the quantity targets which gave us an over-supply of inner city flats.Strategic initiatives by government and by developers to stimulate the buying process are welcome as is the repositioning of housing nearer the top of the political agenda. It may also be time for a re-appraisal of controls, standards and the degree of competition in the private rented sector. In the meantime as a lender we will continue to play our part too, by helping first time buyers in our locality to save for a mortgage and to obtain an affordable mortgage on the right property for them.

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