An entire generation could be "locked out" of the housing market

1st September 2011

Forecasts suggest home ownership in England is set to fall to levels not seen since the mid-1980s.

The National Housing Federation, an organisation which represents the work of housing associations and campaigns for better housing, is warning that a shortage of new homes, higher prices and tighter mortgage lending will leave an entire generation "locked out" of the housing market.

In an interview with the BBC, Housing Minister Grant Shapps has responded by saying: "I think their analysis is basically right. If you have a situation where house prices triple as they did over a ten year period from 1997 to 2007, then of course the upshot is that a lot of people can't afford a home so we need to reverse that situation. House price stability is part of that and the Halifax announced on Saturday that house prices are now more affordable than they have been for the last twelve years. That's because house prices haven't been moving very much in recent times, and the other thing of course is very low interest rates - that's the main thing that you can do to help and cutting the deficit has been beneficial in keeping those interest rates lower for much longer."

BBC: "Well they would say one of the other main things that you can do to help is to build more affordable housing and they would say that since the Government announced the abolition of the regional housing building targets last year, plans for more than 220,000 new homes have been abandoned by local authorities who feel that they haven't got any movement on that."

Grant Shapps, Housing Minister: "Well look, they're right about the first thing. The answer of course is to build more homes. They're wrong about the second - those 200,000 homes were entirely imaginary. They were based on top-down plans the last Government had set, told people that they would be built, the fact that these house plans were in regional strategies which were bogged down in the courts and were never actually going to get built of course is material to this, these were not homes which were about to appear. What we've done is put in place of that a scheme called the New Homes Bonus which is a multi-billion pound programme which makes sure that when a community builds a home, they get the money to go with that to provide the services and infrastructure and the rest of it. And the other thing we're doing is massive planning reform - we're taking thousands of pages of very complex planning law and boiling it down into a sixty page document that I know even the national housing federation who have produced this report today approve of. Now that will help planning permissions go through faster and more easily in a system which is far too complex at the moment."

BBC: "As you've intimated, there are often many reasons that a lot of people can't get on the property ladder and it's a complicated picture. It's interesting reading the comments of Ray Boulger from the mortgage brokers John Charcol who says part of the problem is that people don't have the deposit and he can see that that is only going to get worse, particularly in the light of increased numbers of people going to university; the rise in tuition fees mean that young people coming out of university maybe thinking about buying a house have already got huge debts, now that's obviously an example of how Government policy in other areas is impacting on the housing market."

Grant Shapps, Housing Minister: "It's certainly true to say that the level of deposit required has been very, very high and the pendulum has swung from you could borrow any amount which was of course what led to very high house prices to almost the opposite where no one was lending anything. I've held a couple of first-time buyer summits this year - one in February and another one in May - and was pleased to see that through some pressure on the mortgage lenders, the amount that's required for a deposit has been falling and of course I mentioned that Halifax affordability study as well. Things have been improving slightly rather than otherwise. I think in reference to what it means about things like student debt, this is not debt for students in the conventional sense of debt because what happens is people get their lifetimes to repay it through their pay packets and only when they're earning enough money to pay it, so I don't think that's going to have a big material impact. What will have an impact is keeping interest rates low and building more homes and those are the twin tracks that we're pursuing."

Your home is at risk if you do not keep up repayments on a mortgage or other loan secured on it.

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