Rents and house prices set to soar by over 35%

Rents and house prices will continue to soar over the next seven years if the government takes no action to address the housing crisis

forecasts

A new report from the National Housing Federation, prepared by Oxford Economics, paints a beal picture of the UK housing market.

By 2020, it claims, the average house price in England will have risen by 35% (to £331,387 – in London it will be over £650,000) and rents are expected to soar by an average of 39%.

The Home Truths report adds that building more homes is the only way to address the problem: 

  • England is already extremely short of housing and the gap between supply and demand is widening. As a country we need 240,000 homes a year just to meet demand but house building numbers are falling. In 2012/13 107,000 new homes were built, 10% less than in 20094.
  • Rents are soaring out of the reach of many. Currently rents take up an average of half of people’s disposable income but in a decade’s time that figure will have rocketed to 57%5.
  • House prices will increase by another 35% by 2020, leaving a huge swathe of the population locked out of home ownership for life.
  • One working person every five minutes is turning to housing benefit to help make ends meet, with the number of employed claimants up 104% since 2009. As a result, Government spending on housing benefit has risen to £24bn, but most of this money is going to private landlords rather than building the new homes which would stem rising housing costs.

benefits bill

David Orr, chief executive of the National Housing Federation, says:

“We hear a lot about ‘making work pay’, but a decent job won’t even cover the cost of a home in England. Billions of pounds of taxpayers’ money is wasted, lining the pockets of private landlords, when it could be better spent building more homes people can afford. Relying on the private rented sector so heavily is a costly sticking plaster rather than a solution.

“In towns and cities pulling away from the recession the dysfunctional housing market is burning the fingers of many people. Hard-working families are spending more and more of their income on a home and many could be forced to move – away from jobs, schools and relatives.

We need to address the problems of the housing market now, before another generation is left locked out and reliant on taxpayers to keep the roof over their head.’

“To fix both England’s housing markets we need to build more homes in the areas that are growing economically, and at the right prices that people can afford. In areas that are stalled economically we need Local Enterprise Partnerships (LEPs) to work with housing associations and other partners to revitalise struggling communities, create jobs and invest in social enterprise. “

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