It has been argued that migration in the UK has been a key contributor to the housing crisis, especially in London, where homes are difficult to build in a cost-effective way.
“In recent decades, population growth has been fairly consistent, however we have seen a big upturn in migration, particularly following the prominence of the EU, and we haven’t been able to get close to the increase in demand for housing,” said Ashley Ilsen of Regentsmead.
“In my opinion the divide between property owners and people that don’t own property will continue to get bigger and bigger, and for the younger generation that don’t own property, the feeling is very much that the ship is sailing.”
“We simply haven’t built enough houses,” explained Chris Baxter of Sensible Home Finance, adding that planning consent and economic concerns have all contributed to the problem.
Chris added that homeownership can be dependent on geographical location, where some areas in the country are much more realistic to buy property than the South East.
Duncan Kreeger of West One Loans explained that the steady fall of house building starts over the years has contributed to the crisis, adding that building more homes is the only way out.
“Smaller supply means the price of what’s left is pushed up until you have a situation where many of people are frozen out of homeownership,” he noted.
Mark Hayward of Lansons believes that the new generation’s aspirations for homeownership have been curtailed, stating: “…affordability with house prices rising faster than wages seems to some a forlorn hope in future ownership,”
Mark added that the percentage of home owners is gradually reducing, while the elderly/ baby boomers are staying put, due to no financial pressure to move.
Scott Marshall of Roma Finance explained that the decline in new builds has resulted in the growth of the private rental sector,“…many potential buyers struggle to raise the deposit to get on the housing ladder because house price growth has far exceeded their salary increases,” he added.
Scott said that ‘generation rent’ is here to stay - except for the “lucky few”.
“…we are seeing more parents buying undervalue property and renovating it for the adult children and families to live in as tenants. That helps solve part of the problem, but the children may not own the home until it is passed on to them,” he added.
While lack of housing appears to be the main reason argued by most property professionals, Michael Riley of Capital & Coastal said that the other fundamental problem is the number of people who own multiple houses.
“We can’t keep building to accommodate demand - land is in short supply - particularly in locations where people most want to live,” he explained, adding that investors owning numerous buy-to-let properties result in prices rising, making it impossible to first-time buyers to save up for a deposit.
So what can be done?
The announcement of The Budget earlier this week has given the lost generation a glimmer of hope, with the promises of a Help to Buy ISA to support first time buyers to save up for deposits.
Scott Marshall believes that the new Help to Buy ISA announced in The Budget this week will help first time buyers save for a deposit, where, for every £200 saved the Government will top it up by £50. “Initiatives like this will help but there is still a long way to go,” he said.
“We have also heard of new Government schemes such as the Starter Home Initiative to build new homes on brownfield land, but this seems a drop in the ocean to what's really needed. Property will be a major factor at the election in May and could sway people as to which way they'll vote,” he added.
Another suggestion was to remove the embargo on green-field site building: “…but only once all existing brown-field sites have been explored as developmental opportunities,” said Chris Baxter.
Michael Riley concluded that the only way to solve the housing crisis is to stop people owning multiple houses.
“The issue isn't building more, although that would help, the issue is making multiple home ownership less attractive by heavily taxing people who buy second homes and preventing buy-to-let landlords buying up before first time buyers get a chance. Abolishing tax relief on buy-to-let mortgages would be a start,” he concluded.
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