This is the only way to halt house prices surging and alleviate the supply shortage
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Yes - I am even talking about the lowest earning families in the country.Now, hear me out.
Unaffordable housing is going to get even more unaffordable
Everyone is moaning about how house prices are becoming "unaffordable." Now this is very true.The Royal Institution of Chartered Surveyors said in its RICS Residential Survey for October that "if the five year projections from members regarding the outlook for both prices and rents is anything to go by, property is set to become even more unaffordable going forward."The latest data from the Office for National Statistics showed that the average property price in Britain is at £287,000. Meanwhile, the average home price for London is at a huge £531,000. The average salary of the ordinary Briton only around £30,000.
There are just not enough houses to go around and so in true supply/demand fundamentals - prices in anything go up when there is not enough for everyone that wants it.
When building houses is not enoughRight now Britain is stuck in a policy dilemma.
UK earnings growth is stagnant. However, house prices are still rising.
Not only does this mean that the earnings to house price ratio is climbing steadily, it means that buying a house is getting out of reach for the ordinary Briton, let alone the poorest in society.
But Britain can't have it all. And the government's push to help people with funds to get on the housing ladder is really just hurting people in the long run and is potentially undoing all its work in trying to get more houses on the market.At the end of 2014, the Confederation of British Industry (CBI) warned that 240,000 properties need to be built annually, in order to accommodate rising demand across the country. Unfortunately, over the last 14 years, over 200,000 homes have been delivered annually in just four periods.
So, earlier this week David Cameron's government pledged to try and reduce the chronic under supply of affordable housing by building 30,000 "starter homes" on brown field sites across the UK. It is aimed at getting more people on the property ladder.But Paul Bogle, head of policy and research at the National Federation of Builders hit the nail on the head for why people still won't be able to afford those houses anyway in this BBC Radio 4 Today programme (emphasis ours):"There are parts of the bill that will encourage development but that's only one part of the equation.
"The homes that are being built and will be built will not be affordable, so the idea they are affordable homes is a misnomer.
So what are the options? There's none really - other than putting the brakes on helping give people cheap credit to get on the housing ladder.Why? Well, because if the government doesn't, it's going to make building those houses all for nothing as they'll be even more unaffordable than they are now and keep the very same people who can't get on the housing ladder already, off the market permanently.
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