Shelter has called on the Government to rethink its Help to Buy mortgage indemnity scheme because of its concerns over house price rises and Britain’s continuing boom and bust housing market cycles.
It said that yesterday’s ONS figures showed that house prices in England were already at record levels, surpassing their previous peak in January 2008, with fears that Help to Buy will push prices even higher.
Shelter said that Help to Buy will fail to help those who need it most, because the mortgage repayments will be too high for middle-income families in almost 80% of the country.
Independent research commissioned by Shelter modelled 80 different household types, examining their wages, savings, and house prices in their area to map the chances of them ever being able to buy a home.
The study assessed their chances of home ownership if the current cycles of house price boom and bust continue, comparing them with a scenario where house prices remained stable.
The research showed that rising house prices in the current property market mean that, without significant financial help from their parents, a generation of people currently in their twenties could be left with more than a 50% chance of never owning a home of their own in every single region of the country – not just in London and the south-east.
The study found that the situation would be very different if house prices were stable, when this generation’s chances of owning a home would rise dramatically. People in the south-west could see their chance of home ownership almost double from 38% to 74%, while those in the west midlands could see their chances rise from less than half to almost 80%.
Shelter is calling for an era of stable house prices to give families a better chance of buying a home, putting an end to decades of damaging house price boom and bust.
To stabilise house price inflation, the organisation is calling for a major housebuilding programme as well as a review of Help to Buy. Shelter also wants the Bank of England to act to stabilise the market if house prices start to rise rapidly.
Campbell Robb, chief executive of Shelter, said: “Our rollercoaster housing market may make headlines, but these days rising house prices don’t have the feel-good factor, and for good reason. Nobody wants a return to the bad old days of house prices rising then crashing.
“Unless house prices are stabilised, the grim reality is that – apart from a lucky few able to rely on the Bank of Mum and Dad – soaring prices may well lead to the prospect of home ownership slipping even further away from even more of us.
“From families left with no choice but unstable private renting, to the tragedy of repossession and negative equity, people are paying the price for our broken property market.”