New body calls for urgent action over house prices

The next generation of homebuyers could face average house prices that are 10 times their salaries unless the number of homes being built increases, an independent housing body warned today.

Research from the newly-established National Housing and Planning Advice Unit (NHPAU) found that more than a third of non-homeowners think they will never be able to buy.

A further fifth believe it will take them at least five years before they are in a position to take their first steps on the property ladder.

Their pessimism comes as the typical price of a home in the UK continues to outstrip salary increases.

Government figures show that in 2000 the average cost of a home was four times annual earnings.

Steep house price hikes meant that by 2006 the typical homebuyer was looking at a home that was seven times his or her salary.

The NHPAU predicts that this is set to rise again unless supply increases.

By 2026 it estimates that house hunters will be faced with average prices 10 times their yearly earnings.

Professor Stephen Nickell, chair of the National Housing and Planning Advice Unit and former Bank of England Monetary Policy Committee member, said: "First-time buyers have seen a big rise in the deposit needed to buy a home and the amount of their income spent on mortgages."

"Demand for housing is growing and unless action is taken, pressure on the market will only get worse."

A survey of 2,700 UK adults by the NHPAU found that three quarters of people think house prices in their local area are a problem, with more than eight out of 10 adults stating that the Government should take action to make housing more affordable.

Prof Nickell added: "There is a clear need for more ambitious and urgent delivery if we are to make homes more affordable for our children."

The report coincides with the official launch of the NHPAU, a body set up to advise policymakers on how to make homes more affordable across the country.

Housing and Planning Minister Yvette Cooper said: "This powerful analysis shows how vital it is to build more homes.

"Sticking to Regional Assemblies' current proposals for 190,000 homes a year simply won't do enough to help the next generation of first-time buyers.

"We have already increased the supply of housing over the last five years, but all of us need to do more to increase housing further. Regional Assemblies and councils need urgently to implement our new planning guidance which supports more housing.

"We also need to bring forward rapidly the plans for new eco-towns in addition to existing housing proposals.

"Those who are still opposing increased housing need to recognise the deeply unfair consequences for the first-time buyers of the future."