World News - Call for action on homes 'crisis'
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    World News - Call for action on homes 'crisis'

    29 August 2011 Last updated at 19:01 ET The housing market will be plunged into "crisis"' without government action to address the "chronic under-supply of homes", a body representing housing associations in England has warned.

    The National Housing Federation (NHF) said the shortage was hitting home ownership rates and boosting rents.

    The government says it has made more public land available for building.

    It is also investing £4.5bn in new lower-cost homes over four years - but NHF said this represented a cut of 63%.

    "More government investment in affordable housing would stimulate a wider, faster economic recovery and help fix our broken housing markets," the NHF said.

    Housing Minister Grant Shapps said his plans would "get Britain building again".

    "That's why I've announced plans to release thousands of acres of public land for housebuilding.

    "And despite the need to tackle the deficit we inherited, this government is putting £4.5bn towards an affordable homes programme which is set to exceed our original expectations and deliver up to 170,000 new homes over the next four years."

    'Expensive and unregulated' Continue reading the main story Analysis

    The difficulties of raising deposits and obtaining mortgages are one side of the problem. The other is housing supply. It is, though, a bit of a catch 22.

    Developers say they are willing and ready to build more homes. But they worry that they won't be able to sell them, because potential buyers will not be able to raise the finance.

    The dilemma for policy makers is how to escape this damaging cycle, of restricted supply leading to high prices, which leads to curtailed demand, resulting in unwillingness to build.




    The rate of home ownership has declined in recent years due to the level of house prices, the need for larger deposits and stricter lending criteria set by banks, the National Housing Federation said.

    Research it commissioned from Oxford Economics suggests that the proportion of home ownership in England, currently 67%, could decline further to 63.8% over the next 10 years.

    But with rents rising, and more than 1.5 million people on waiting lists for social housing in England, it is also the lack of affordable alternatives to home ownership that is worrying to the NHF and others.

    "Millions of people across the country remain desperate for an affordable place to live, with more and more forced into expensive and unregulated private rented accommodation, said Campbell Robb, chief executive of housing charity Shelter.

    "With major developers holding planning permission for at least 188,000 new homes, the government must urgently look at ways to get construction going. This will not only create jobs and drive growth but will deliver the homes people desperately need."

    'Generation rent' Oxford Economics predicts that average rents will jump by almost 20% over the next five years.

    Matt Griffith of campaign group priceout.org said young people in particular now faced the "toughest housing environment in decades".

    Continue reading the main story Viewpoint

    Matt Griffith is renting because he cannot afford to buy his first home. He is a spokesperson for the pricedout.org group.

    "It is important to remember that the decline in home ownership rates is happening overwhelmingly amongst the young.

    This is a tale of two generations. Home ownership has been growing strongly for older age groups despite the credit crunch - and is projected to reach record levels, with over 80% of pensioners set to become home owners by 2026.

    For younger groups it is the exact opposite - home ownership has slumped and current trends are making it even more of a distant dream.

    Unfortunately housing pressures have been increasingly playing themselves out in the private rented sector. Market adjustment appears to be happening through higher rents, not lower house prices. This is being reinforced by banking lending behaviour which is favouring the equity rich over potential young buyers."


    "This is producing a lose-lose for generation rent," he told the BBC News website.

    "Squeezed incomes from rent rises, inflation and stagnant wages are making saving for a deposit difficult.

    "We have a slump in house building levels whilst government efforts to stop declines in the wider housing market benefits existing owners over those priced out of the market," he said.

    Mr Shapps said that he was determined to "pull out all the stops" to help first-time buyers.

    "That's why I've held summits with lenders to encourage them to do more to help people take their first step onto the housing ladder, and I've launched the FirstBuy scheme as a valuable alternative to the 'Bank of Mum and Dad' for those struggling to get together that much-needed deposit."

    Announced in the Budget, the £250m scheme aims to help up to 10,000 people buy their first home by helping them out with a deposit.

    Those buying properties from some developers could receive a loan worth up to 20% of the value of the home from the government and the housebuilder.

    Pricedout.org said only a small number of those wanting to buy would be helped.

    But it praised government proposals to change the planning system to try to encourage more commericial residential housing.

    The National Housing Federation also said last month's draft National Planning Policy Framework, which aims to simplify the planning system, was "a step forward".





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