Housing in the UK has become increasingly unaffordable. With property prices almost eight times household income levels across England and Wales, home ownership has fallen for the first time since census records began.
Last year, Chancellor Philip Hammond declared that the government would set aside £3.7bn to address the UK’s housing crisis, with the promise of building an additional 140,000 homes for sale or rent by 2020.
This sentiment was backed by the Conservative government’s White Paper which denoted the housing crisis as one of the greatest barriers to progress in Britain and pledged to instigate a comprehensive approach to tackle failures at every point in the system.
Yet despite the government’s stated intentions, the number of people forced into homelessness is expected to more than double to half a million by 2041.
So what are the biggest issues stalling housing recovery in the UK?
Soaring House Prices
Wage growth has now fallen far behind the rise in house prices. At the end of August, the average London salary was just £34,473 whilst the average house price in the city of London stood at £894,837.
With household income squeezed and inflation outstripping growth, a rising number of families are struggling to pay for even the lowest available rents in the private sector, resulting in higher levels of eviction and homelessness.
New housing supply continues to lag behind the growth in demand.
According to the Department for Communities & Local Government (DCLG) for instance, the number of housing completions in the UK fell from over 370,000 in 1996-70 to 141,000 in 2013-14.
A new study by the Civitas think tank likewise found that rates of construction are especially low in areas set to experience the largest growth in coming years.
Capital housing in London is expected to cover only 55 per cent of population growth and, of the 30 fastest growing council areas outside London, 21 have a house building output well below the (already inadequate) national average.
Planning Permission Potholes
Despite the national generational shortfall in housing, the inconsistency, complexity and unpredictability of Britain’s planning system continues to hinder the chances of an improved UK housing climate. With community secretary Sajid Javid recently coming forward to claim that some councils had an up-to-date plan, but were not always honest about the level of housing required for their area, we seem to be stuck in a viscous housing cycle.
Perpetual changes in national and local planning, for instance, in addition to complicated land deals and unnecessary consent conditions, are imposing unrealistic time constraints and terms on housing development.
Despite these obstacles, it is imperative that both lenders and investors continue with residential developments, price on asset potential as opposed to risk and find innovative ways to speed up time-sensitive processes.