UK housing crisis sparks first review for over 10 years

Earlier this month the Labour party launched a housing review to find ways in which to sustainably increase home-ownership. The review is led by Taylor Wimpey CEO Pete Redfern and supported by a panel of housing experts including Kate Barker who led the previous housing review in 2003.

Labour’s shadow minister for housing and planning John Healey, said the review was needed in order to help stop the continued decline in home-ownership in the UK.

“More than four in five of us, aspire to own our own home,” Mr. Healey states on the Labour Party website. “Yet home ownership has fallen each and every year over the last five years. [It is] Now at the lowest level for nearly three decades.

Mr. Redfern, meanwhile, said such a review is needed and that the inexorable rise in house prices is a real problem. “Enabling more British people to own their own homes is fundamental to creating a flourishing society and is an issue that has a profound impact on the country,” Mr. Redfern states on the Labour party website. “I feel strongly that home ownership has never reached the right level in our society.”

Mr. Healey isn’t the only politician who is making the UK housing market an important issue. Both the main London mayoral candidates, Labour’s Sadiq Khan and Conservative Zac Goldsmith are focussing on the lack of affordable homes for Londoners in their respective campaigns.

This spotlight on the UK’s property market shows that while the financial markets are stumbling yet again, the rising price of property continues regardless, making it an attractive investment but an increasingly tough ladder for first-time buyers to step onto.

Indeed, Lender Halifax reported that house prices rose 1.7% on the month in January from December last year, to a fresh record high average price of £212,430. “The imbalance between supply and demand continues to exert significant upward pressure on house prices,” said Halifax chief housing economist Martin Ellis. “This situation looks set to persist over the coming months.”

Mr. Ellis isn’t the only one who expects further increase. The recent news from the Bank of England that the slowdown in the global economy has likely ended any expectations of rates rising at all this year suggests mortgage rates will remain low and attractive to those in a position to make a property purchase.

That BOE view, ratings firm Standard & Poor’s said, is inflating house prices further. "Low interest rates and QE... is now also one of the drivers behind the widening wealth and income gap between younger and older generations and between those on the housing ladder and those not on it,” said Jean-Michel Six, S&P's chief economist for EMEA in a recent UK review. "Younger low and middle-income households [would-be first-time buyers] are the ones affected most”

While so much focus is currently on the UK’s housing market, continued price increases and falling home-ownership levels it remains to be seen whether policies or rules are put in place – sooner rather than later - to make property affordable once more for a larger proportion of aspirational, hard-working Britons.