Only three in ten of today’s ten year olds will be able to afford to buy their own homes unless house building increases, according to figures released by the Office of the Deputy Prime Minister today.
By 2026 the proportion of thirty something couples able to afford to buy is set to fall to approximately a third, compared to half of couples today and two thirds in the late 80s, if the country carries on with current building rates.
The figures show that unless more new homes are built to meet the needs of the next generation, tomorrow’s thirty year olds will be denied the opportunities their parents and grandparents had to own a home of their own. Currently 71% of households are homeowners, but 90% say they would like to own their own home at some point.
Today’s preliminary projections are based on analysis as part of the government’s response to the Barker Review, which will be set out in full before the end of the year. The analysis shows that building more homes can reduce pressure on house prices and helps more families afford their own homes.
Households under 30 have already seen a drop in homeownership, according to new national statistics that were published yesterday. The Survey of English Housing 2004/05 shows how the number of households under 30 with mortgages has dropped from 40% to 36% between 2000 and 2004. 10 years ago the figure was 46%.
Government analysis also shows that problems with affordability are becoming a threat to social mobility. ODPM figures show that 23% of first time buyers are now relying on gifts and family loans in order to afford a deposit, compared to just 4% twenty five years ago.
The Barker Review showed that Britain has not been building enough homes to meet rising demand for several decades, and the result has been rising house prices and growing problems of affordability. Over the last thirty years the number of households has increased by over 30%, but the level of building of new homes has fallen by over 50%. In the South and East, for every seven new households, only four new homes are being built.
Yvette Cooper, housing and planning minister, says: “For the sake of today’s ten year olds we need to start planning new homes for the future right now. It isn’t fair if people’s chances of owning their own home in the future depends on whether their parents or grandparents were homeowners before them.”
The Barker Review called for a step change in house building to meet rising demand and set out a series of recommendations for reform. The Government has already set out proposals for an increase in house building over the next ten years as part of the Sustainable Communities Plan – including 200,000 more homes than within current regional plans, to be built in the Thames Gateway and three other growth areas.
As part of the Sustainable Communities Plan the Government has also increased environmental protection. Over 70% of new homes are now being built on brown field land compared to 56% in 1997. New building standards will mean new homes are 40% more energy efficient compared to five years ago.
Cooper says: “A lot of myths and misinformation about house building have been promoted by people who want to block new homes. The fact is we can build more new homes and safeguard the environment at the same time. People need to recognise it is unsustainable to carry on as we are. We need to protect the environment for the next generation. We also need to make sure they have homes to live in.”
The Government is also developing new shared equity schemes to help first time buyers get a foot on the property ladder. The new home buy scheme will help more than 100,000 households by 2010. The Government has also made clear that new social housing is needed as part of the plans. Building of social housing is set to increase by 50% over the next three years to 2008.