The proportion of young adults still living with their parents will pass 50 per cent within a generation, unless radical action is taken to tackle Britain’s housing shortage, according to research published today.
It warned that the average house price in England could double to £446,000 in 10 years if current trends in the “broken” housing market continue, and could quadruple to more than £900,900 by 2034. The current average price in Scotland is £138,000 and in Wales it is £139,000, making the UK average £178,000. The report predicted a vicious circle of rising prices and rents will deep the crisis unless the new government elected next year acts.
Shelter, the homeless charity, and KPMG, the audit and tax advisory firm, addressed their joint report to David Cameron, Ed Miliband and Nick Clegg. They warned the three party leaders that the dream of home ownership will remain beyond the reach of millions without a change of course next year.
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.”
Today’s report warned that attempts to curb the £24 billion-a-year housing benefit bill will accelerate the trend towards young adults living with their parents, with more than half doing so by 2040. “As house prices climb further out of reach and with affordable housing in short supply, the private rented sector will continue to grow,” it said. “Increasing demand will make securing and affording a private rented sector home increasingly difficult, meaning that renters as well as first time buyers will increasingly find themselves priced out.”
The study predicted that home ownership will be determined by inheritance, rather than hard work and saving, which will deepen a social divide. Those young people lucky enough to get a foot on the housing ladder will rely increasingly on the “Bank of Mum and Dad”.
About 100,000 fewer homes are built each year than are needed. Labour has promised to double the figure to 200,000 a year if it wins power next year, but not until 2020. The report called for housebuilding levels to rise 250,000 a year by 2021 to meet rising demand.
Mr Robb added: “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 housebuilding 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.”
Marianne Fallon, UK head of corporate affairs at KPMG, said: “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. 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… 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.”
Today’s blueprint for tackling the crisis includes empowering local authorities to create “new home zones”, which could generate over 8,000 additional homes per year; five new garden cities to provide 30,000 homes; increasing the diversity of the building industry through Help to Build funding to support small and medium-sized firms and giving councils more power to borrow money for building.
Other ideas include setting up a National Housing Investment Bank to provide low cost, long term loans providers and offering special savings accounts, such as "housing Isas" to raise finance from retail deposits. Building on “stalled sites” would be sped up to stop land being left dormant, by charging council tax on the homes that should have been built after a reasonable period.
In an open letter to the party leaders, Mr Robb and Ms Fallon said all parties shared responsibility for the housing shortage and should now commit to ending it. They said: “Taking steps to lower the cost of land for development would lower the profits made by some land owners, but allow better homes to be built and stimulate a new wave of SME builders who have been squeezed out of the market.”
Kris Hopkins, the Housing Minister, said: "This report is alarmist and takes no account of the work already well under way to get Britain building and deliver the affordable homes that families need. Since 2010 we have built 170,000 affordable homes and are set to deliver 335,000 by 2018.”