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13th September 2011

House prices will rise pincered between inadequate housing supply and mortgage lending constraints

The housing market is in crisis as home ownership tumbles and house prices soar, a study has warned.

Home ownership in England will slump to just 63.8% over the next decade, the National Housing Federation's forecast said, the lowest level since the mid-1980s. Huge deposits, combined with high house prices and strict lending criteria, have sent home ownership into decline, the Federation said.

The Federation, which represents England's housing associations, warned the housing market will be plunged into an unprecedented crisis as it also forecast steep rises in the private rental sector and a house price boom. The Federation blamed the bleak outlook on an under-supply of homes in the UK.

Federation chief executive David Orr said: "With home ownership in decline, rents rising rapidly and social housing waiting lists at a record high, it's time to face up to the fact that we have a totally dysfunctional housing market.

"Home ownership is increasingly becoming the preserve of the wealthy and, in parts of the country like London, the very wealthy. And 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."

In England, the proportion of people living in owner occupied homes will fall from a peak of 72.5% in 2001 to 63.8% in 2021, the Federation forecast. In London, the majority of people living in the capital will rent by 2021 with the number of owner occupiers falling from 51.6% in 2010 to 44% by 2021, it added.

The North East will be the only English region to see any increase in owner occupier numbers over the next decade, rising marginally from 66.2% to 67.4%, the Federation predicated.

The average house price in England will meanwhile rise by 21.3% over the next five years from £214,647 in 2011 to £260,304 in 2016, according to Oxford Economics, which was commissioned to produce the forecasts.

The Federation warned the hundreds of thousands of people locked out of the housing market will see the options open to them become increasingly limited.

Average rents in the private sector are forecast to increase sharply by 19.8% over the next five years fuelled by high demand and a shortage of properties. Oxford Economics predicted that means rents would increase on average in England from £486 a month in 2011 to £582 a month in 2016, meaning tenants would be paying £1,152 more a year in total.



Source: yorkpress.co.uk