Even with a £50,000 deposit, central London and areas to the south and west of the capital remain unaffordable. Analysts suggest recent rises in UK house prices have been driven by increases in London and the South East.
“Home ownership is out of reach for the vast majority of low to middle income families because few have the savings needed for a deposit,” says Ms Alakeson. “While the crisis in London is well documented, there are affordability black spots in almost all regions of the country.”
Affordable is defined as a rent that is no more than 35% of net household income”
The government recently announced a Help to Buy scheme, offering loans for people moving into new-build homes worth up to £600,000. Another government scheme to assist those buying new-builds and existing homes is due to come into force next January. And shared ownership schemes provided through housing associations are also available to some first-time buyers.
The housing minister said the government had put a range of measures in place to create “a bigger and better private-rented sector”, including the £1bn Build to Rent fund and £10bn in loan guarantees to build new homes specifically for private rent.
“And for those looking to buy, the numbers of towns which are affordable for first-time buyers is at its highest since 2002, thanks to schemes like Help to Buy which enable people to buy newly-built homes with a fraction of the deposit they would normally require,” he added.
However, there are concerns that without a significant increase in housing supply, additional demand generated by such schemes will push up house prices, exacerbating the problem of affordability.
The latest figures show that in the year to last March, just over 108,000 new homes were completed in England. But this is less than half the number needed to meet demand.
Homelessness is on the rise with more than 55,000 households in temporary accommodation in England – 10% higher than a year before. More than 1.8m households are currently on the waiting list for social housing – a 60% increase in the last 10 years.
The Mayor of London, Boris Johnson, has described the shortage of affordable housing as “the gravest crisis the city faces”.
In his plan for the capital, 2020 Vision, published last month, Mr Johnson writes that high house prices have had “brutal consequences for many Londoners”.
“Fewer and fewer take out mortgages in the way that their parents did, because they simply cannot afford the deposit,” he says. “Rents are now punishingly high, and pre-empt an ever growing proportion of your disposable income.”
There are concerns that London is pricing out the key workers it needs to function.
Cost to income ratio for a low income couple with one child
Private rent map
This map is for a couple with one child at the 35th percentile of the household net income distribution, living in a two-bedroom property at the cheaper end of the local housing market.
Source: Resolution Foundation analysis of Hometrack data 2012/13
Responding to the Resolution Foundation report, the chief executive of the housing charity Shelter, Campbell Robb, said families were paying so much for housing that “they’re forced to choose between putting food on the table, turning on the heating or paying their rent”.
- VIDEO: Rent ‘unaffordable’ in one-third of UK (bbc.co.uk)
- ‘Rent to buy’ won’t fix home ownership | Hannah Fearn (guardian.co.uk)
- Private Renting – the stigma ends? (timgarrattnottingham.co.uk)
- Landlords have evolved, but the rules protecting renters are stuck in the past (newstatesman.com)
- CIH: Rents must fall if government to reel in benefits bill (24dash.com)
- Lack of housing, not credit, is root of property problem (guardian.co.uk)
- People Living in Caves as UK Homelessness Reaches Five-Year High (webabuser.blogspot.com)
- Average monthly rents in England and Wales set to reach £800 (news.fjpinvestment.com)
- UK rental costs reach all-time high (24dash.com)