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Friday, June 08, 2007

Bleak House

The Times yesterday painted a bleak future for the housing market and for first time buyers. It is estimated that by 2026 the average house price will be 10 times the average person's salary.


"The next generation of first-time buyers will face house prices equivalent to ten times their average incomes, putting home ownership out of reach for the majority of young people, a new government agency says today.

The average home in England currently costs seven times annual earnings, but that is set to rise to ten times by 2026 even if the Government succeeds in its aim of sharply increasing the rate of homebuilding, the analysis reveals.

Campaigners said that the developing crisis would "stop social mobility in its tracks", and force young people to live in overcrowded conditions and take out ever-riskier mortgages.

The stark warning comes from the National Housing and Planning Advice Unit (NHPAU).."

How has this sorry situation come about?

Aside from the very obvious points that the UK is not building enough new houses, and that the rising population is placing an intolerable burden on the scarce housing stock, there are also other factors at play here:
  • A rise in single person households

  • The greater wealth of "younger" buyers, and their greater aspirations, means that they leave home earlier in their lives

  • The elderly are no longer living with their children, and are often (before being "homed") living in the original family homes

  • There has been a rise in multi house ownership
Aside from an increase in housing stock, which is not in any bank or property owner's interest as it will push prices down, there will need to be a change in social attitudes, customs and practices wrt to the above.

This is unlikely to happen in the short term. Hence the situation looks very bleak indeed for first time buyers.

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