The East Midlands is set to see the steepest increase in private sector rents of any English region over the next five years, and with house prices set to climb, home ownership is no real alternative.
That’s the warning from the National Housing Federation, which warns of a ‘dysfunctional housing market’ locking out an entire generation. With house building down to its lowest level since the 1920s the severe shortage of housing is only getting worse, with huge implications for house prices and private rents across the country.
According to Oxford Economics - who were independently commissioned to produce the forecasts - the average house price in England will rise by 21.3% over the next five years from £214,647 in 2011, to £260,304 in 2016. At 19.2% the predicted increase in the East Midlands would see prices rise from £153,200 in 2011 to £182,600 in 2016. Unsurprisingly, it’s expected that we will see a dip in levels of home ownership – down from close to 73% in 2010 to 70% in 2021.
Those languishing in the private rented sector in the East Midlands are really going to feel the pinch over the next five years, as this region is expected to see rents ramp up by 25% (the highest increase of any English region), fuelled by high demand and a shortage of properties. Oxford Economics predicted that would mean rents would increase on average in the East Midlands from £361 a month in 2011 to £451 a month in 2016, meaning tenants would be paying £1,080 more a year in total.
That comes as over 309,000 people are currently stuck on social housing waiting lists in the East Midlands, and only those in the most desperate of circumstances have a realistic chance of being allocated a home.
At the heart of the problem remains a chronic under-supply of new homes. In 2010/11 just 105,000 homes were built in England – the lowest level since the 1920s.
The National Housing Federation states that more government investment in affordable housing would stimulate a wider, faster economic recovery, helping to fix our broken housing markets.
It is calling for suitable surplus public land to be made available for the building of affordable homes, for local authorities to regularly assess housing need and for ministers to make a renewed commitment to building the homes the country needs.
For housing associations to secure their financial futures, it is also vital that ministers scrap plans to remove tenants’ rights to have their housing benefit paid direct to their landlord, which could seriously hinder associations’ ability to borrow from the banks.
Jon Longden, The Federation’s East Midlands Manager, said: “The steady increase in house prices across the East Midlands is making home ownership more of a dream than a reality for thousands of households on lower, and even average incomes. With further rises over the next five years the situation’s going to get untenable, meaning home ownership will start to become the preserve of the wealthy.
“We’ve already got thousands of households stuck on housing waiting lists here and with the steepest rise in private sector rents of any English region coming our way, it’s pretty clear that we have a totally dysfunctional housing market in the East Midlands.
‘A chronic shortage of new homes is at the heart of the issue. The fact that house-building has dipped to its lowest level in 90 years means we’re facing a major crisis.
“Ministers need to make unused public land available to housing associations and local authorities must assess the level of housing need in their area. Housing has to be finally treated as a top political priority.”