According to the National Audit Office (NAO), owning a home is now a lot more affordable than at any time since 2007. Yet, trying to get on the housing ladder in the first place has become more difficult since 2008. That’s what a new report by the NAO suggests, with it concluding that “the rate of housebuilding needs to increase right across the country.”
One statistic behind the claim that owning a home is nowadays more affordable, is that the percentage of homeowners who spend more than a quarter of their net income on housing fell to 19% last year from 40% in 2007. On the other hand, if you’re a first-time buyer, because social housing rents have been rising higher than earnings since 2001, as well as with rents elsewhere, it means that for those currently renting it’s now much harder to save for a deposit.
Furthermore, the NAO report shows deposits for first-time buyers were now, on average, 21% of the purchase price. Even though this is actually a decrease from 2009 when deposits were, on average, 28%, it’s 8% more than they were in 1990. Plus, in actual cash terms, since house prices have risen significantly since 2009, those buying a house for the first time now still need to find a larger deposit compared to 2009.
The NAO estimated in its report, which is into government housing policy and the housing market, that the government spent approximately £28bn during the course of 2015-16 on housing. This was mostly on housing benefit with £21bn received by around 4.1m claimants. Although the government has promised it will build one million new homes by 2020, the NAO said that the current rate of housebuilding was not sufficient to meet this target. This is a view many others in the housebuilding industry have already expressed.
Over the last ten years up till this present year, an average of 166,000 homes were built annually. That yearly average is set to increase with 227,000 new households projected to be created each year, between 2011 and 2021. However, the NAO said there still needs to be around 174,000 additional properties created annually in order for the target of one million new homes to be achieved. This includes converted properties as well as new build homes.
One further hindrance of present government policy mentioned was the reduction by 1% in rent local authorities and housing authorities could charge. This meant councils had less revenue to build much-needed new housing stock.
Amyas Morse, head of the NAO, echoed concerns viewed elsewhere by saying: “The government has put into place a range of policies to increase home ownership and housing supply. Central to this ambition is to supply one million new homes by 2020, mainly through supporting private housebuilders. Nevertheless, to deliver this target, there needs to be a significant increase in the current supply of houses being built.”