September 21, 2006 | posted by Michael Baxter in Uncategorized |

If inflation is still relatively low, then why is it, for the First Time Buyer, their single biggest item of expense just keeps going up.? It’s all down to definition of course, but for the poor old property owner, it must feel as if inflation is out of control. According to a new report from the New Policy Institute (NPI) for the Joseph Rowntree Foundation (JRF), mortgage costs for first-time buyers are back to the peak levels recorded in 1990. And over a third of working households under 40 cannot now afford to buy.

Household possessions are soaring too. Recently we saw a reversing of a 15-year downward trend, with court orders for repossessions doubling since 2003. At the same time, only 20% of all mortgage holders have a mortgage protection policy, compared with a Government target of 55%. Government help with mortgage costs has also diminished substantially over the past decade, says the report.

Does this mean the bottom is about to fall out of the property market? Maybe, but on the other hand, other factors are pushing house prices up further.

The report said: “For many decades, the number of households has been growing much more quickly than the number of people, up by 35% since 1971, compared with a population rise of just 8%. This in large part reflects a significant increase in the number of adults living alone. Overall, the total number of homes has been keeping up with this household growth. However, the rate of household growth in England is projected to increase from 150,000 per year from 1991-2006 to 220,000 per year from 2006-2021 and this will require a substantial increase in the rate of house-building. “The number of new affordable homes being built for those who need subsidised housing is not keeping up with current demand, let alone addressing the substantial backlog. At 35,000 in 2005-2006, it is half the levels achieved in the mid-1990s, and well below the 48,000 that Kate Barker, in her report commissioned by the Government, estimated as the minimum necessary.”

For further information

Major new UK report reveals alarming trends in housing supply, availability and affordability Joseph Rowntree Foundation

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