The Challenge of Buying a Home

It is difficult for young people to buy a home as mortgage availability and house affordability reach disturbing levels. The problem is worst in cities, as people are attracted to live and work. Attempts to address the situation are made but more needs to be done to avert a looming housing crisis.

The issues

The issues are complicated as rents rocket and house prices leap beyond the reach of the young and the low paid.

Banks, builders, developers, government, planners and policy-makers are all blamed and no doubt play a role in making the process of buying a house more gruelling than it should be.

But the low number of houses that are built when measured against current and future demand stands out as a key issue if the problem is to be resolved.

The fact that the majority of house building is left to the private and voluntary sectors is also a factor in the shortage, as the state is largely absent.

Lifestyles and family patterns also have an effect as people’s circumstances change more often and in more ways than in the past.

Traditionally, a family would own and live in one home, whereas, today with higher rates of separation many families live in two or more homes.

The fact that greater numbers of people are living for longer restricts the turnover of houses and reduces the number of large homes on the market, as older people are likely to own bigger homes.

In many other countries, government and the public sector play a bigger role in making sure enough houses are built to meet demand.

There is also a need to ensure that houses are built in the right places close to towns and cities and to public transport to ensure a good quality of life.

It is also necessary to attract more people into the industry to ensure the right skills are available as the age profile of workers reaches worrying levels.

Some questions

Young people have to live at home or pay unaffordable rents as rising demand and falling supply make the situation worse.

In an attempt to find the right answers, it is important to ask a number of key questions:

  • how many houses are needed?
  • where are they needed?
  • how do interest rates affect supply and demand?
  • what role can government play?
  • what effect is high house prices having on the economy, on communities and on society?
  • what help is needed for young people and first-time buyers?
  • are there intergenerational issues of fairness and equality?
  • how much affordable housing is needed and where?
  • what effect does the rental market have on the demand for new homes?
  • are current finance and mortgage arrangements fit for purpose in today’s climate?
  • what effect is short-time and part-time working having on the demand for mortgages?

So, public, private and voluntary sector investment aimed at building houses is needed to return the sector to a balance of price and affordability. But action is needed now.