People who bought homes in England at the peak of the market in 2007 paid an average price of £216,800. But the NHF warns it’ll take until 2014 – when average prices are predicted to hit £226,900 – before homeowners get back the purchase price.
The Federation, which represents England’s housing associations, said it fears an entire generation of people would be locked out of the housing market as a result of high house prices. It said the chronic shortage of social housing will leave those shut out of the home ownership market with little realistic chance of getting a social home.
Independent economist Oxford Economics forecasts house prices will increase 22% over the next five years, fuelled by this chronic under supply of new housing.
The economic report entitled Home Truths 2010 suggests house prices will rise 7.5% this year, but fall again in 2011 by 3%, before recording a modest increase of 0.9% in 2012.
After that, prices will rise more significantly by 4% in 2013, 5.4% in 2014, and 4.9% in 2015 – or to 22% higher than in 2009, it said.
In 2009/10 just 87,360 new homes were started in England, according to the report, producing only enough homes for a third of the new households forming each year. More than 1.76m households, or the equivalent of 4.5 million people, were on social housing waiting lists in 2009, a 23% increase in the last five years.
Federation chief executive David Orr said: “Even though price rises look sluggish for the next few years, affordability is not improving for many low-to-middle income households – as banks continue to restrict their mortgage lending and house prices remain historically expensive in relation to salaries.”
“There’s a very real risk that an entire generation will be locked out of the housing market for the foreseeable future and people will increasingly look to buy or rent an affordable home instead.”
But Orr said the Government’s decision to scrap regional house building targets, withdraw funding for new affordable housing schemes and to cut budgets, means the future looks bleaker than ever for millions of people currently stuck on waiting lists.
“Proposed caps on housing benefit payments could also put nearly a million people on low incomes at risk of losing their home – and further deepen the nation’s dire housing crisis,” he said.
“We would urge the Government to closely consider the huge human, social and economic cost of failing to invest in affordable housing.”
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