Young families and callow individuals seeking to climb onto the property ladder, can seemingly take heart from David Cameron’s most recent pledge to erect 100,000 new homes whilst also slashing 20% of their sale price.
The proposed policy ostensibly addresses key difficulties within a turbulent housing market, and one would be forgiven for thinking of it as a potential golden ticket to a better life and future. 100,000 more affordable properties provided specifically for the younger generation, many of whom are so green, at present, the only interest they buy into is the latest Apple fad.
However, when time is taken to consider Cameron’s latest move regarding the housing market, slightly seedier inferences can be made.
Firstly, the coercive language used by Cameron in his pledge to create more affordable housing smacks of electorate-pandering politics, sounding fruitful in theory but lacking any substance, and cynics can be excused for being suspicious of the Prime Minister’s intentions so close to the election. But, vote-hungriness aside, the vagueness infusing Cameron’s words obscure the bigger picture, which this writer believes does not make attractive viewing for the younger generation.
“We want to help more young people achieve the dream of home ownership so today I can pledge we will build 100,000 homes for young, first-time buyers:” said David Cameron.
“We will make these starter homes 20 per cent cheaper by exempting them from a raft of taxes and by using brownfield land.” Brownfield sites are areas previously used for industrial and commercial purposes.
Although Cameron identifies the dearth in affordable housing as a palpable threat to our economic growth, it is questionable whether 100,000 more houses – by 2016 – will be enough to alleviate the problem. Housing Charity, Shelter, recently asserted that the UK is currently constructing new homes at her slowest rate since WWI despite the population having increased unrecognisably. According to Shelter, another 100,000 – 150,000 more houses are needed per year to lighten the burden faced by low-income property seekers, otherwise house prices will continue soaring, and it is that simple.
Impact of Falling Real Wages
PricewaterhouseCoopers (PwC) have repeatedly expressed their belief that house prices will increase by over 33% to £328, 000 by 2020, a figure made all the more staggering given the average property purchased by a first-time buyer went for £50,000 in 1997. But whilst homeowners from the 1990s have become increasingly property-rich, especially those based in the south east, young professionals embarking on their chosen career paths have been subjected to falling real wages leaving those based in London and the south east with barely enough to subsist. Home-owning aspirations for this group naturally takes a back foot, and the disillusionment stemming from this lack of aspiration is not likely to yield social mobility of any kind.
With house price growth soaring above real wage growth, the 20% discount which at first appears so attractive could prove superfluous in terms of value by 2016 – the earliest the public can expect Cameron’s proposed housing development to be completed.
Furthermore, whilst Cameron lights up the eyes of would-be buyers with the allure of inexpensive housing, he makes no mention of the quality of said housing. Brownfield sites, though appearing as vast, derelict expanses perfect for slapping a housing development on, are generally tainted from industrial exploits and as such are far more costly to build on due to decontamination costs. Moreover, the vast majority of brownfield sites are found in the North, yet the majority of demand lies in the south east. The question facing housing hopefuls is whether or not they are willing to invest in a help to buy mortgage in a housing development most likely built in an unsightly, bad neighbourhood.
House prices are now roughly 7 times people’s average incomes, meaning any mortgage policy taken out by a young saver is an inherently burdensome commitment, Help to Buy or otherwise. As such, the notoriously unhinged rental market has thrived, with landlords increasingly comfortable with extorting their tenants through the imposing of stealth fees & spiralling rent. What’s worse is the perceived quality of a significant portion of rental properties, as a shocking third of all private rental properties in England are thought to not comply with the Decent Homes Standard.
As such, young individuals find themselves between Scylla and Charybdis in the form of spiralling house prices and an overpriced private rental sector. Rousseau would be turning in his grave, as the social contract continues to be contorted by policymakers seemingly ignorant of the housing plight faced by fledgling, low-income individuals across the UK. No doubt this group will continue striving to save funds from their paltry salaries, struggling with rising bills and other monetary obligations, dreamy-eyed over notions of 2 kids and a white picket fence.
But government has a responsibility to be forthright with the electorate over a housing situation which is very, very bleak – not deploying half-hearted measures, explained in vague terms, and presenting them as tangible solutions.