Reform of planning rules 'vital' to meet growth in demand

Most thirtysomethings will be priced out of the market by 2026 if planning rules are not urgently reformed, the Government’s new advisory body has found. Its report today shows that only 40 per cent of 30 to 34-year-olds in England will be able to enter the housing market in 2026, compared with 57 per cent today.

That figure has deteriorated from well over 60 per cent in the late 1990s, the National Housing and Planning Advice Unit (NHPAU) says. Its report illustrates the dramatic decline in affordability since 1998, which has seen the cost of properties in most of the South East and large areas of the North West going from four to eight times average earnings.

The Government’s aim of building 190,000 homes a year is not enough to deal with the problem, it says, because an estimated 223,000 new households are being created every year as the population expands and people choose to stay single for longer.

Analysis by The Times shows that the Government is falling behind in its aim of increasing the supply of new homes. Just 174,060 houses and flats were started in the year to March, figures from the Department of Communities and Local Government show, the lowest figure for two and a half years.

Adam Sampson, chief executive of Shelter, the housing and homelessness charity, said: “Housing of all types, but particularly home ownership, is going to escalate beyond the means of all but the wealthiest or those with family money.

“That will inevitably exclude from a share in housing wealth all but the most qualified and it will stop social mobility in its tracks.”

Homebuyers risked overstretching their finances to take out evermore precarious loans, he said. The impact of higher prices would also be felt on those who rent and would have a knock-on effect on the whole economy, with many more people forced into social housing.

The NHPAU said that the proportion of first-time buyers’ incomes taken up by mortgage payments had increased considerably in the past three years to reach nearly a quarter of income. Its report emphasised that reform of the land planning system was urgently needed to free the supply of new homes.

It said: “There may be difficult choices and issues to confront in the future. These potentially include brownfield versus greenfield development, and building on some greenbelt land.”

But its proposals were attacked by the Campaign to Protect Rural England. Neil Sinden, its policy director, said: “It’s critical that we don’t pursue simplistic and ultimately futile solutions to the problems of affordability. There’s very little hard evidence to say that you can make much of a dent in the short term on house price inflation simply through supply side measures.”

Yvette Cooper, the Housing Minister, said: “This powerful analysis shows how vital it is to build more homes. Sticking to regional assemblies’ current proposals for 190,000 homes a year simply won’t do enough to help the next generation of first-time buyers.”

Michael Gove, the Tory housing spokesman, said: “This report underlines the fact that the next generation won’t get on the housing ladder unless we build more homes. . . Only a genuinely liberal approach can solve this problem.”, 07.06.2007

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