In November, the Redfern report found that reduced access to finance, a rapid increase in house prices and a fall in earnings for younger people was responsible for a 6.2% drop in home ownership between 2002 and 2014.
Although some developers may now be turning to social housing to offset this decline, Ashley Ilsen, head of lending at Regentsmead, argued that home ownership could be unnecessary for today’s youth.
“…The idea of actually owning a property is quite a British trait,” Ashley explained.
“Take, for example, Germany where very few actually aspire to own property and the culture is more about renting.
“While affordable housing is important, owning a property isn’t essential; in my opinion it’s much more important to make sure young people have economic stability and purchasing power in what they earn.”
In December, the mortgage guarantee element of Help to Buy – which provided an additional 15% of the property value when buyers raised a deposit of 5% – came to an end.
Ashley claimed that the scheme had not proven to be a quick-fix for the ownership shortage.
“A lot of our clients that registered for Help to Buy in order to see to first-time buyers soon regretted it, given how slow and cumbersome the sales process was.”
Perhaps as an alternative measure, in November’s Autumn Statement, Chancellor of the Exchequer Philip Hammond announced plans to invest £1.4bn to deliver 40,000 affordable homes.
London is also set to receive £3.15bn of affordable housing funding, which will help to build over 90,000 such homes.
Mr Hammond announced a raft of affordable housing investments in the Autumn Statement
However, Steve Turner, head of communications at the Home Builders Federation, warned that many more homes must be built in order to tackle the housing shortage.
“Housing output over the past three years has increased significantly, but we have been under delivering new homes for decades and have a huge shortfall to make up.”
Though he too acknowledged that supply was heading in the right direction, Darren Rix, director of credit risk at Zorin Finance, admitted that there was little encouragement for developers to build more affordable homes.
“We expect affordable housing provision to shift gear from stagnant to lethargic growth, as new funding provisions and a streamlined planning process push against the headwinds of developer reticence and shortages of available land,” Darren stated.
“However, the provision of affordable homes has always been a zero-sum game between local government and housebuilders, whose conflicting incentives often result in zero-sum housebuilding.
“Developers are understandably keen to reduce the percentage of affordable houses to the lowest levels possible in order to maximise the profits and appeal of their sites.”
Like Ashley, Alex Moss, operations manager at Zorin Finance, cited European housing trends as a possible solution to the supply problem.
“…Whitehall is taking inspiration from countries such as the Netherlands and Germany, where high-quality, pre-fabricated homes are common and offer the potential build out sites in a fraction of [the] time and cost of traditional developments.
“Such approaches may be particularly attractive to councils who are increasingly seeking to build out their own developments.”