According a new report, there will be at least 350,000 households across the UK that will be excluded from the housing market by the end of the decade due to the shortage of affordable homes to buy or rent.
This news comes as property website Rightmove revealed the lowest slowdown in asking prices for four years in the month of November. The figures reinforce the way in which people on middle and low incomes are being forced out of the market by rising private sector prices.
According to analysis by Savills, in the next five years, there will be 70,000 households each year that cannot afford to buy or rent homes without financial aid of some sort. This equates to 350,000 people needing housing below the market price by the year 2020.
The figures work on the assumption that households can spend up to a third of their total income to pay for housing. They do not take into account “any backlog of unmet need and the effect offalling stock levels due to right to buyand proposed sale of high-value council homes,” according to Savills. This means that the effect of rising prices could be even more harsh than currently predicted.
As many people could have guessed, this problem is expected to hit London and the South East of England the hardest. Property prices have rocketed in these areas and are now even higher than the peaks reached before the economic crash. Savills predict that there will be 11,500 households in the south east of England and 26,000 households in London that are priced out of the market every year. It went on to state that the average income of a priced out household in London would be £20,000 but that there would be areas in which a family on £60,000 a year would not be able to afford housing.
Official figures were released on Thursday, which revealed that there were 25% more homes built in 2014-15 than in the previous period, however there was also an increase in the amount of properties being sold off due to right to buy.
The associate director at Savills research, Chris Buckle, said:
“There can be no question that we need to boost house building volumes, but these new homes need to be built across a variety of tenures to put homes within reach of those in greatest need.”
“Our concern is that new policy will result in a greater shift from sub-market rental products towards more expensive shared ownership and starter homes accessible only to those on middle incomes.”
Miles Shipside, Rightmove’s housing market analyst, said:
“Those looking to market their property as Christmas gets closer often have a greater sense of urgency to find a buyer and sensibly recognise that trimming their asking price will provide an incentive to potential buyers more focused on seasonal Christmas trimmings.
“Buoyant market conditions and a confident outlook for 2016 mean that the reduction, while no doubt welcome to hard-pressed buyers, is the most Scrooge-like since 2011. It ‘s likely to be a short-lived respite as the combination of high confidence and low interest rates is a recipe for higher prices next year.”