The term austerity has become synonymous with the coalition government’s recent term and it was interesting to note that as tens of thousands of people marched in protest at these austerity measures a new book on the Chancellor was released entitled George Osborne: The Austerity Chancellor. Coincidence? Maybe not.
Taken directly from the fountain of all knowledge that is Wikipedia – ‘austerity refers to a policy of deficit-cutting by lowering spending via a reduction in the amount of benefits and public services provided.
Austerity policies are often used by governments to try to reduce their deficit spending and are sometimes coupled with increases in taxes to demonstrate long-term fiscal solvency to creditors.’
Now I’m not going to get too political but rightly or wrongly it’s evident that austerity measures have impacted a number of industries and of course the general public. The housing market is certainly one area that continues to suffer through a sustained lack in supply of affordable housing and now an increased emphasis on affordability struggles in the rental market.
In its recent Home Truths 2012 report the National Housing Federation found that the future of the housing market was looking even bleaker for those struggling to buy, with both private rental and house prices forecast to rise sharply from 2015. With private rents said to be now increasing at a faster rate than house prices and the knock-on cost to the taxpayer rising as a result.
The report shows that the cost of privately renting a home has risen by 37% in the past five years, and is set to soar a further 35% over the next six years. In five years, that means they will be almost a third higher than they are now. It added that private rents are likely to be fairly stable through 2013 but could see steep increases from 2015 to 2018 of around 6% a year as interest rates rise and house prices increase.
It continues that despite government efforts to tackle public debt, it is actually spending more on housing benefit. 417,830 more working people, an 86% increase since 2009, are now said to be reliant on housing benefit to help them pay the rising rents on their home. And this is increasing as almost 10,000 more working people every month need housing benefit to help pay their rent.
The National Housing Federation is calling on the government and the whole housing industry to take a long-term joined up approach to tackle the market difficulties.
More immediately it states that the government must release publicly owned brownfield land to housing associations so they can build more houses. Using the government’s own data the Federation has identified sites equivalent to twice the size of Leicester that could be built on now.
Of course there are already government initiatives in place to tackle affordable housing with NewBuy arguably having the highest profile.
Indeed, its performance was recently backed by the CML calling its take-up figures “encouraging” and by the Home Builders Federation adding that the scheme was “gaining momentum”.
Harking back to the Budget earlier in the year there was also a pledge from the government of an extra £150m to the Get Britain Building fund – taking the total to £570m, potentially paving the way for up to 16,000 new homes. And just last month the West Midlands announced its first funding deal to kick start work on a development under this programme. So there are some positive signs but the question remains are these enough?
The truth is that the jury is still out. It’s evident that affordable housing and new build remain firmly in the governments cross hares but whilst the current initiatives will help support the supply of new housing it’s evident that unfortunately there is no quick fix to the austerity/affordable housing conundrum.
