In her first speech as Prime Minister, Theresa May vowed to “build a better Britain not just for the privileged few” and she spoke of the “injustice” that younger people will find it “harder than ever” to purchase their own homes. Given the rising prices of homes across the UK coupled with the decrease in home construction since Brexit, there is a clear mandate for the new government to do something concrete to meet the challenge housing charity Shelter has called a “drastic shortage of genuinely affordable homes”.
The Resolution Foundation, a not-for-profit research organisation working on behalf of those on low and modest incomes, used data from the Office for National Statistics’ Labour Force Survey to show that home ownership is decreasing across the UK.
The Resolution Foundation, said its analysis showed that the struggle to own a home was no longer just a “London-centric issue”, but in fact was a growing national problem. The foundation’s analysis revealed that home ownership in the UK was at its peak in 2003, when 71% of the population owned their homes. This has now dropped to less than 64%, with the largest drop seen in Manchester where now only 58% own their own homes as compared to 72% in 2003.
“London has a well-known and fully blown housing crisis, but the struggle to buy a home is just as big a problem in cities across the North of England,” said the foundation’s policy analyst, adding, “The chances of owning a home have fallen fastest in Greater Manchester over the last decade, though the Leeds and Sheffield city areas have also experienced sharp drops.”
The falling rates of home ownership are a combination of rising housing prices and incomes that haven’t kept pace with house prices. The average first time buyer paid just under £30,000 for their new home in the 1980s compared with more than £150,000 now, the report said. Average UK wages were £11,700 in 1985 compared to £26,500 in 2015, clearly not increasing as quickly as average house prices.
This comes on the heels of July PMI figures that indicate UK construction is contracting at the fastest rate since 2009, in wake of the Brexit vote. The average drop in housebuilding over the last two months has been the most severe for seven years, according to Markit’s recent report. They added that the industry was already in recession and underperforming.
Liberal Democrat leader Tim Farrow warned: “The housing crisis is now turning into a national emergency. Wages are being squeezed with the rise of zero-hours contracts and the ‘bank of mum of dad’ is being stretched to breaking point.” It is obviously taking buyers longer to save as the average first time home buyers two decades ago was in their mid-twenties, whereas now first-time buyers are between 35 and 38 years old.