Affordable homes 'drought' warning

Only one in every five homes for sale in England is affordable to a typical working family trying to get on the property ladder, a report by Shelter has found.

A report has highlighted a dearth in affordable housing
A report has highlighted a dearth in affordable housing

The housing charity, which analysed more than 325,000 properties with at least two bedrooms for sale across England, found that just 17.9% of them were within the financial reach of a household with children on an average local wage, leaving the remaining 82.1% beyond their means.

Just 86 properties were found to be affordable to local families in the whole of London, compared with 16,134 in the North West.

But the report warned that the "drought" of affordable homes for typical working families looking to get on the property ladder is not just confined to London and the South East, where only 0.3% and 4.2% of properties respectively were deemed to be within their means.

Even in the North East, where the highest proportion of affordable family properties was found, almost two-thirds (62.7%) of homes were still found to be out of the average local family's reach.

In Exeter, out of 553 homes advertised for sale, only eight, amounting to 1% of properties, were found to be affordable for a typical household.

In South Lakeland in the North West just 43, or 4%, of the 1,069 properties being marketed were found to be affordable to families, while in Herefordshire just 3% were affordable, at 46 out of the 1,751 homes for sale.

In 14 local authority areas examined by Shelter, no homes for sale were deemed affordable for young families starting out.

These areas, which were dotted around London and the surrounding commuter belt, were named by Shelter as Westminster, Kensington and Chelsea, Camden, Ealing, Brent, Richmond upon Thames, Kingston upon Thames, Waltham Forest, Islington, Sutton, Slough, Epsom and Ewell, Adur and Watford.

To make the calculations, researchers trawled through thousands of properties advertised for sale on property website Zoopla during a single day in April.

For a property to be deemed "affordable", they assumed that the typical first-time buyer would put down an 18% deposit and borrow around 3.4 times their income, in line with average figures from the Council of Mortgage Lenders' (CML) database.

Using official statistics, the research also took variations in local wages across England into account. Incomes were adjusted to reflect the lower ages of first-time buyers.

Researchers assumed that a family with at least one child might include one adult on a full-time wage and another working part-time. Across the country, the average full-time wage for someone aged in their 20s is just over £21,000.

The findings come despite the launch of the Government's flagship Help to Buy scheme to make it easier for people with small deposits to move on to or up the property ladder. Critics of the scheme have said that as well as adding to the pressure on the demand for homes, the initiative has also generally helped to fuel people's house price expectations.

Office for National Statistics (ONS) figures released last week show that across the UK, house prices have leapt by 9.9% annually to reach a new high of £260,000 typically in April - putting the average house price at around 12 times the salary of someone aged in their 20s.

Expectations have been growing that the Bank of England is poised to announce further measures to calm the market further later this week.

There are already signs that the housing market is starting to cool, following the introduction of stricter mortgage lending rules at the end of April, which force lenders to probe people applying for a home loan more thoroughly about their spending habits.

The British Bankers' Association (BBA) reported yesterday that mortgage approvals, both to home buyers and people re-mortgaging, have been falling for four months in a row.

Campbell Robb, chief executive of Shelter, said: "When a family looking to buy their first home searches a whole town for a place to live and finds nothing they can afford, it's clear we're not just facing a housing shortage any more: it's a full-blown drought.

"As the pool of affordable properties shrinks ever smaller, thousands of people are being forced to wave goodbye to their dreams of a home of their own - even those who've been able to put aside a large deposit."

Housing Minister Kris Hopkins said: "Improving housing affordability for hard-working people is a vital part of our long-term economic plan.

"That's why we've cut the deficit inherited from the last government; keeping interest rates at a record low, and why we have prioritised limited financial resources for investment in housing.

"Thanks to our efforts the number of first-time buyers is at its highest level in five years and over 131,000 households have been able to buy or reserve a property through Government-backed home ownership schemes since 2010."

Here are the numbers and percentages of homes on the market which were found to be affordable to families with children in each region, according to Shelter:

North East, 9,748, 37.3%

North West, 16,134, 29.8%

Yorkshire and the Humber, 12,440, 31.3%

East Midlands, 6,070, 19.5%

West Midlands, 7,465, 22.6%

East, 2,174, 7.1%

London, 86, 0.3%

South East, 1,712, 4.2%

South West, 2,437, 6.0%

England, 58,266, 17.9%