Fix our housing shortage or see house prices quadruple in just twenty years, warn KPMG and Shelter
Without a radical programme of house building average house prices in England could double in just 10 years to £446,000, according to new research released today. In twenty years they could quadruple, with the average house price estimated to rise to over £900,000 by 2034 if current trends continue.
The research from KPMG and Shelter also reveals that, more than half of all 20-34 year olds could be living with their parents by 2040, as soaring housing costs caused by the shortage of affordable homes leave more and more people priced out of a home of their own.
The warning comes as KPMG and Shelter launch a landmark new report, outlining how the 2015 government can turn the tide on the nation’s housing shortage within a single parliament.
With recent government figures showing that homeownership in England has been falling for over a decade, the consequences of our housing shortage are already being felt.
The report sets out a blueprint for the essential reforms that will increase the supply of affordable homes and stabilise England’s rollercoaster housing market.
It calls on politicians to commit to an integrated range of key measures, including:
– Giving planning authorities the power to create new homes zones that would drive forward the development of new homes. Combined with infrastructure, this would be led by local authorities, the private sector and local communities, and self-financed by sharing in the rising value of the land.
– Unlocking stalled sites to speed up development and stop land being left dormant, by charging council tax on the homes that should have been built after a reasonable period for construction has passed.
– Introducing a new national housing investment bank to provide low cost, long-term loans for housing providers, as part of a programme of innovative ways to finance affordable house building.
– Helping small builders to get back into the house building market by using government guarantees to improve access to finance.
– Fully integrating new homes with local infrastructure and putting housing at the very centre of city deals, to make sure towns and cities have the power to build the homes their communities need.
Case study: Andy from Enfield is 28 and is living with his wife in his parent’s house, while they attempt to save for a deposit. Andy’s brother and his partner are in the same situation and also living in the house.
Andy said: “We would love to be able to buy somewhere when we’re in our 30s, but with house prices as high as they are, this is looking pretty much impossible.
“If you’d asked me when I was 21 and graduating, I’d have hoped to own some sort of property within a few years. It’s sad that even though we’re living with my parents and saving as much as we can, this is still so far out of reach.”
Campbell Robb, Shelter’s chief executive, said: “Our chronic shortage of affordable homes means that a generation face a future of living in their childhood bedrooms into their thirties. But this report proves that the next government can turn the tide on the housing shortage within a single parliament.
“The reality is that government backed mortgages like Help to Buy or tweaks to planning rules will only ever be sticking plaster solutions that risk making the problem worse, not better. We will only build the homes we need by creating a healthier house building market through boosting small builders, giving towns and cities more power, finding new investment, and getting land into the hands of those who can get building high quality, affordable homes.
“The thousands of young people and families forced to watch their dream of stable home slip further out of reach are already paying the price for successive governments’ failure to build the homes we need. With housing now a top issue for voters, politicians of all parties are rightly beginning to feel the need to act.
“This isn’t just a blueprint for how to get Britain building, it’s a blueprint for how to restore the aspirations of a generation who’ve been left with little hope of a home of their own. We have shown politicians that it is possible tackle our housing shortage head on, and now we need to see action to make this happen.”
Marianne Fallon, UK head of corporate affairs at KPMG, commented: “What is clear from our report is just how big and messy our housing problem is. For many people, particularly those in their twenties, the aspiration of owning their own castle is fast becoming a fairy tale. We also know, as an employer of 12,000 people, that an unstable housing market affects our ability to attract and retain talent.
“However, our report shows that a government which is prepared to roll up its sleeves and commit to a programme to tackle each element of the problem, over a parliament and beyond, has the chance to make home ownership a realistic dream again. Three examples of bold moves which could meaningfully shift the status quo include empowering local authorities to create new home zones, which could generate over 8,000 additional homes per year; increasing the diversity of the building industry through Help to Build funding to support SMEs and giving local authorities more borrowing power to build. As the housing crisis rises in the consciousness of the electorate, there could be political prizes for those who are prepared to throw their arms around this large and complex issue.”