The UK housing market is in crisis as home ownership rates continue to fall, according to the National Housing Federation (NHF).
The latest study found that over the next decade home ownership across England will fall to 63.8%, the lowest level since the mid 1980s.
The NHF claims there is a ìchronic undersupply of new homesî as only 105,000 homes were built in England during the 2010/11 period. This is the lowest level since the 1920s.
The UK housing shortage, combined with steep rises in the private rental sector, paint a bleak picture for future homeowners.
According to the Oxford Economics report, the average house price is expected to rise by 21.3% over the next five years from £214,647 in 2011, to £260,304 in 2016.
Affordable housing is a particularly pressing issue for the government at the moment. Plans to build more than 220 new homes have been abolished by local authorities since regional house building targets were scrapped last year.
NHF chief executive David Orr believes that the housing gap between rich and poor is increasing;
ìHome ownership is increasingly becoming the preserve of the wealthy and, in parts of the country like London, the very wealthy.ì
ìAnd for the millions locked out of the property market the options are becoming increasingly limited as demand sends rents rising sharply and social homes waiting lists remain at record levels,î Mr. Orr continued.
Since the recession, banks are less willing to hand out mortgages. The combination of crippling personal finance fears, a general shortage of housing and tough mortgage rules has left many edging away from the property ladder.
Many cannot afford to purchase property at a time when some banks are insisting on deposits of 25% to get the cheapest deals.
With the cost of living soaring, increasing fears over job losses and the base rate at an all time low, many are too concerned about their financial future to commit to buying a property.
Despite house prices falling by 0.6% in August, the future of the housing market does not look set to improve any time soon.
Robert Gardner, Nationwide’s Chief Economist comments; “Sluggish demand for homes, combined with only a gradual rise in the supply of available properties, has helped to keep property prices stable since last summer. ì
We expect this trend to be maintained over the remainder of 2011, although downside risks have increased as UK and global growth prospects have weakened.”