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Supply and demand gap widens as housing market fails those at the bottom

The newly updated housing market statistics and commentary from leading academics Hal Pawson and Steve Wilcox forecast a subdued housing market which is both a contributory cause and a symptom of a slow and uncertain economic recovery.

The Briefing also casts doubt on the prospects of the supply of rented homes meeting growing demand from both potential first time buyers and lower income households waiting for scarce social housing. 

Latest household projections show that the number of households in England and Wales is due to grow at a rate of 245,000 per year, while we are building fewer than half of the homes we need to keep pace.  The New Homes Bonus in England is predicted to boost house building numbers by between 8 and 13 per cent by 2016/17, and greater freedoms for councils in Scotland to build new homes is already making a difference.  However, housebuilding rates for the UK show only the very modest beginnings of any recovery from historically low levels – and are currently producing less than half the level needed to keep pace with household growth.

Sarah Webb, CIH Chief Executive, said: “Whilst people in all parts of the housing sector are working hard to try to provide new homes in all tenures, it is an uphill struggle. The new homes bonus is set to make a small difference and planning reforms will also help, but the time has come for more than incremental measures.  We need much more focus on housing in economic policy, and we need politicians and practitioners to work together to find new ways to promote affordability, secure sufficient investment, and face up to the demographic timebomb.”

Steve Wilcox , co-author of the Briefing, said: “The housing market and policy challenges ahead for the government cannot be underestimated. Stronger interventions are required to improve the supply of mortgage finance, especially for first time buyers without access to substantial deposits. The government also needs to reconsider its approach to dealing with housing costs within its wider welfare reforms. The current proposals are too complex, and fail to provide the transparency required for effective work incentives.”

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