Rising house prices are set to precipitate a crisis amongst would-be first-time buyers in coming years, according to a new report. Research by Oxford Economics for the National Housing Federation (NHF) has predicted that prices will rise as much as 40% by 2012, to an overall average of over £300,000.
As young people become less able to get onto the housing ladder, the NHF are calling for more social housing, saying there is urgent need for 70,000 social homes to be built a year. Prices in London are now 13 times average income for the area, while prices in Kensington and Chelsea and South Buckinghamshire are now 20 times local average incomes, found the report
The research also forecasts developments in the next decade, predicting a slowdown through 2008 with an end of year figure of 2% inflation, but then an acceleration from 2009 onwards, with prices rising as much as 10% a year once more in 2011 and 2012.
David Orr, chief executive of the National Housing Federation said: ?Our report shows that continuing house price rises and the resulting housing crisis are set to stay with us for a long time. While Gordon Brown’s pronouncements on house building indicate a step in the right direction, it is imperative that ministers turn their words into deeds and deliver on their promises.
?For those key workers and low-income families looking for a decent home, it is critical that ministers invest sufficiently in social housing. This will enable housing associations, and others, to build the desperately needed 70,000 new social homes a year.?