At the moment, only half of Britain’s young couples can afford to get on the property ladder. 15 years from now, it will be less than 30%. That’s the assessment of the Joseph Rowntree Foundation – a leading social policy research and development charity. Their report (Tackling housing market volatility in the UK) argues that the housing market in its current state heightens inequality, and that urgent action is needed put the breaks on the “damaging rollercoaster” of boom and bust.
Specifically, the report recommends an increase in the supply of both private and council housing, as well as the introduction of credit controls, which might include temporary restrictions on the amount individuals can borrow, to mitigate future booms. Council tax reforms are also proposed – council tax should be a fixed percentage of a property’s value, according to the report.
If first-time buyers from privileged backgrounds continue to rely on parents to subsidise their entry into the property market, this will contribute to a widening of the gap between rich and poor, and 70% of an entire generation will be “locked out” of the “property owning democracy”.
In 2007, home ownership levels began increasing, but this trend has been reversed by a combination of inflated house prices and poor availability of credit for first-time buyers. At the same time, housing supply is currently at its lowest level since 1923. In order to address this, planning controls could be eased and public land could be released on a “build now, pay later” basis. The JRF has also pointed out that, in order to build new homes, small builders and developers need to be able to borrow money more easily.
There are profound social benefits to be reaped from a less volatile housing market, according the report, but with a Government committed to a radical programme of cuts, it seems unlikely that the JRF’s recommendations will be taken on board by those responsible for housing policy.