According to a new study, the UK will never build sufficient new homes to bring the price of property down.
The study was presented at the annual conference of the Royal Economic Society, saying that individuals wanting to get onto the property ladder would have to rely on the occasional slump in the market.
University of Reading economists stated that the overall trend will continue to see the prices of residential property rise quicker than salary growth. Alexander Mihailov, Geoffrey Meen and Yehui Wang said:
“The increases in housing supply required to improve affordability have to be very large and long-lasting; the step change would need to be much larger than has ever been experienced before on a permanent basis.”
Although solutions to the housing crisis have been discussed by the government, the changes aren’t sufficient enough to slow down property price growth. According to data from the Office for National Statistics, the average property price in the UK stands at £217,500. This equates to 7.7 times the average UK salary of £28,200.
According to the former policy maker for the Bank of England, Kate Barker, there would have to be around 60,000 new homes a year, in addition to those already being built, to have an impact. The paper states that another factor may impact on affordability – a market collapse. Although this would be bad news for existing homeowners, it would give first time buyers an opportunity.
In the current situation, a CeMAP qualified mortgage adviser can help buyers to find a suitable mortgage deal for their new home.
