Real Estate

UK housing crisis: how did owning a home become unaffordable?


The UK has a housing crisis: in recent decades the cost of buying a home has risen faster than wages, leaving many workers priced out of the market.

In some parts of the country, low-deposit mortgages are no help, because would-be homeowners cannot afford the monthly repayments on the mortgages they will need, leaving them in the position of needing to save large sums to put down.

High private sector rents make this difficult – and also mean that in some areas 40% of tenants need state help to pay their monthly housing bills. Affordable social housing has become scarcer, leaving many households with no choice but to rent – often paying more than they would for a mortgage.

Here is a short history of how we came to this point:

Years of selling off social housing followed by more than two decades of a property market fuelled by cheap credit have put households who do not own homes in a difficult position. High rents make it hard to save enough for mortgages that would cost less each month. Runaway house prices mean that for some it is impossible to ever save a big enough deposit to raise a mortgage. Low interest rates make property attractive to investors, and help those who can afford a deposit raise big sums to buy – but they are no help to those who are saving up.

Putting things right will not be simple, but there are things that can be done to improve the situation.

*Note: The UK yearly average house price shown is a calculation of the mean value of the HPI UK monthly averages.

Main image: Composite, Corbis/Getty Images, PA



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