Housing affordability

ended 28. July 2022

This morning at 09:30, the ONS is publishing a report on housing affordability in the UK, specifically the ratio of disposable household income to house prices. It will be published >> here << at 09:30. Exactly how bad is the affordability crisis in this country and how can it be solved? This alert will be left open until 10:10am so you can wait to see the report or fire away. 

4 responses from the Newspage community

As ever any 'crisis' will be region specific. For example, houses are still affordable in Derbyshire so prices will continue to grow. Indeed the latest Rightmove stats showed prices in the East Midlands growing at the fastest rate nationally. The bit that always seems to get neglected from any conversation on house prices is the alternative. Rental prices are utter insanity and continue to grow. There just isn't the available stock. Therein lies the crux of the problem. We don't have enough houses, we don't build enough houses and therefore house prices will keep on rising and stretch normal people even more. Until anyone solves that issue we are going to see the same story again and again.
The cost of living crisis is only just beginning and will worsen; with dire energy price cap predictions, the highest tax burden in 70 years, and the Bank of England poised to increase the base rate for the sixth time in a row, making mortgages more expensive, it's little wonder people are readying themselves for a general strike. Corporate profits are at bumper levels, with dividend payouts to shareholders increasing, yet all we see is perpetual squeezing down the line. This is crippling hardworking people who create the wealth but sadly never get to share in the wealth. People can't take anymore, which will feed into reduced homeownership rates, increasing repossessions, and a spiralling mental health crisis. Many people feel like they're on a treadmill, and someone keeps increasing the speed. At some point, you collapse and fall off. We need a radical and transformative rethink of our economy. Workers of the world, unite! You have nothing to lose but your chains.
Affordability? What affordability? There is no affordability in the housing market. Average property prices have massively outpaced wage growth since the late 1990s. The only thing making them 'affordable' are ultra-low interest rates, which are fast disappearing. In the meantime, we have chronic homelessness and working people resorting to food banks to feed themselves and their families. Yet, there is complete silence from politicians on the obvious correlation between high mortgage and rent costs and people's living standards. It's time for a radical change of policy and thinking around housing. More house building, and including property prices in the 2% CPI inflation target, would be a good start.
In terms of monthly repayments on capital and interest mortgages over 25 years, house price increases have meant a larger percentage of income goes on mortgage payments. However, this would not be the case if you looked at interest-only, or even extended the traditional term to say 30, 40, or even 50 years, in which case mortgage costs could be represented at near historical lows. The truth is that most people don’t stay in their first home and therefore don’t need the burden of a capital repayment mortgage. The easiest way to ease affordability is to reintroduce interest-only as a viable and available option, at least in the early years of homeownership.