The Most Pressing Issue
The housing crisis has been dubbed a crisis for good reason. A Guardian article published in November 2016 called it the “most pressing crisis of the age.” (1)
Figures showed that house prices have soared by 151% since 1996. However, earnings have only risen by a quarter as much. (1) The failure of wages to rise with house prices has made homeownership a distant dream for many. Cllr Martin Tett, spokesman for the Local Government Association (LGA) research explained, “The housing crisis is complex and is forcing difficult choices on families, distorting places.” (2) The LGA also warned that “the sharp fall, combined with rents rising at a faster pace than incomes, meant that home ownership was becoming more difficult for an increasing number of people.” (2)
Despite the shocking reality of these statistics, the news isn’t novel. It’s true that today’s millennials may be fully aware of record high rents, “one-bed flats costing seven times income, and deposits on new homes that take nearly a lifetime to save. The difference now is that the grown-ups accept that action is urgent – not least because they’re approaching retirement and the kids have still not left home.” (1)
Shocking Figures
Two decades ago 46% of all 25-year-olds were home-owners. Now, just 20% of all 25-year-olds are homeowners. (2)
Recent analysis by Savills shows that between 2015 and 2016, only 6,550 social rented homes were built. Between 1995 and 1996, 56,960 were built. This equates to an 88% drop in the amount of social rented homes built. (3)
“In addition, the research shows that on average, private renters now pay 34 per cent of their total household income on rent and social and affordable renters pay 29 per cent. In comparison, homeowners pay an average of 18 per cent of their total household income on their mortgage, and those that own outright have no housing costs.” (3)
Harsher Reality
Recent figures show that the housing crisis is actually worse than it seems. Indeed, the BBC have recently announced that “home ownership in the UK is overestimated by conventional data, with many more renters than the figures suggest.” (4)
According to the Resolution Foundation, the officially published estimate of a 64% home ownership rate was deemed too high. (4)
The criticism suggests the figure is too concentrated on households rather than people. For example, many people shared accommodation or owners had lodgers, and this was overlooked. (4)
Resolution Foundation argued that just 51% of families or individuals owned a home – not 64%. (4)
The think tank, which lobbies for low-income families, is “calling for more attention to be paid to the millions of others who rent.” (4)
Doom and Gloom?
These figures paint a pretty bad picture of the housing crisis. However, there are potential solutions on the way…
Written by Jenna Kamal
Sources
- https://www.theguardian.com/business/2016/nov/20/britains-housing-crisis-must-be-tackled-now
- https://www.theguardian.com/society/2016/dec/22/home-ownership-among-25-year-olds-in-england-and-wales-has-halved-in-20-years
- https://www.estateagenttoday.co.uk/breaking-news/2016/12/number-of-25-year-old-owners-more-than-halved-in-20-years
- http://www.bbc.co.uk/news/business-38415213?intlink_from_url=http://www.bbc.co.uk/news/topics/38a2903a-b068-486e-bda2-58c035e1490a/housing-market&link_location=live-reporting-story
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