UK
22/07/2013 03:23 BST

Housing Crisis Will Deepen Due To Baby Boom Says National Housing Federation

ENGLAND, Kent, Rochester, Aerial view of street layout.
PA
ENGLAND, Kent, Rochester, Aerial view of street layout.

The country's housing crisis will deepen due to a failure to build enough homes to cope with a baby boom in the last decade, a report has warned.

George Osborne's measures to boost the property market could create another house price bubble unless more was done to increase the supply of new homes, the National Housing Federation (NHF) claimed.

The report said the Chancellor's measures were "sticking plaster answers" but the situation demanded a long-term plan to get Britain building and action from local councils to construct new homes in their areas.

It said that a baby boom in the 1980s, which saw birth rates jump in England by 13% between 1982 and 1990, had created a "jilted generation" now in their late 20s and early 30s and struggling with housing costs.

It warned that history was set to repeat itself following a further increase in the birth rate in England in the 2000s.

The report said: "England experienced a further baby boom with 6.9 million live births between 2001 and 2011. In 2020, the first children from this boom will be turning into ambitious young men and women, looking to move out, find work and kick-start their adult lives. This will put a massive strain on an already beleaguered English housing market."

Research has predicted rents in 2020 will be 46% higher than they are today and the cost of the average first-time buyer's home will be £245,165.

The shortage of affordable housing will mean 3.7 million young people living with their parents in 2020, an increase of 700,000.

The report said: "Young people are stuck in a vicious cycle: because we aren't building enough homes, house prices continue to rise.

"This increases the demand for private rented accommodation which, in turn, pushes up rents. High rents make it very difficult for young people to save for a mortgage deposit - the amounts of which will continue rising because house prices are going up.

"The Government is trying to tackle some of these problems. Last year it asked Sir Adrian Montague to look at the private rented sector. In his review, Sir Adrian called for more investment in and reform of the sector.

"This led to the Chancellor announcing in this year's Budget that £1 billion will be made available towards building more private rented homes, and a scheme, Help-to-Buy, designed to boost home ownership by helping more people onto the housing ladder.

"But making mortgage deposits cheaper to aspirant homeowners without increasing housing supply doesn't tackle the root of the problem. It simply risks creating another housing bubble where prices are pushed up.

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"These sticking plaster answers will not heal our critically injured housing market. We need a vision from our leaders that looks far beyond future elections - a long-term house building programme that will create jobs, pump money back into the economy and give hope to millions of young people around the country dreaming of adulthood and independence.

"Britain must get building again now. The future of the country - and our young people - depends on it."

National Housing Federation director Ruth Davison said: "We failed to fix the housing market for the eighties baby boomers because we simply didn't build enough homes.

"This means that, even with decent jobs, many are now struggling to raise a mortgage deposit or pay their rent. But rather than learn from past mistakes, the country is still not building enough homes to tackle the problem.

"The situation will be even worse for the Millennium children. Seven years from now the eldest will be young adults, looking for work, seeking independence and dreaming of living in their own homes.

"If we expect them to take over the reins and drive the country forward in an increasingly competitive global economy, we must provide them with the foundations for a bright, stable future.

"To solve this housing crisis, we need to build more of the right homes, at the right prices, in the right places. The decisions about housing are being made locally, by local councillors.

"But they won't act unless people reach out and tell them they want more homes in their community. We need to build more homes now."

Housing minister Mark Prisk said: "This report does not take proper account of the range of measures we've put in place to create a bigger and better private rented sector which includes the £1billion Build to Rent fund and £10 billion in loan guarantees to build new homes specifically for private rent, and the billions of pounds we're investing in an affordable homes programme that will lead to the fastest rate of housebuilding for two decades.

"And for those looking to buy, the numbers of towns which are affordable for first-time buyers is at its highest since 2002, thanks to schemes like Help to Buy which enable people to buy newly-built homes with a fraction of the deposit they would normally require, and the action we have taken to pay off the deficit has kept interest rates down and made homeownership more affordable."