Neil Hudson reveals why experts fear Leeds is facing a housing market meltdown.
ToDay experts are warning that the housing market in Leeds could be heading for disaster.
The National Housing Federation is warning that a combination of crippling rents and lack of affordable housing means that a vicious circle is being created.
People are being priced out of both rented houses and home ownership.
Most people will know someone who is struggling. In the past few decades home ownership came increasingly within our grasp, but all that has changed.
Sons and daughters today stare aghast at the average house price and wonder how they will ever save enough for a deposit.
Thirty or forty years the average three-bed semi cost around the £40,000 mark and a young upwardly mobile couple could expect to move in on just one person’s salary.
But then came the housing boom and house prices rocketed, much to the delight of those lucky enough to own them.
The problem came when the next generation wanted to step on the bottom rung of the property ladder and found it was already way above their heads.
Last year, the average house price in Yorkshire and the Humber was £155,303 – almost EIGHT times the average wage. Since 2001, house prices in the region have more than doubled, rising by a staggering 110 per cent. Needless to say, wages have not kept pace.
The knock-on effect has been more people have turned to the private rental market and, according to new statistics out today, rents are soaring to unsustainable levels.
Robert Warm, lead manager for Yorkshire and Humber for the National Housing Federation, the trade body for social landlords, said private rents had already increased by 40 per cent in the last two years and were expected to increase a further 64 per cent over the next decade.
He said: “Fundamentally, this is about supply and demand. Not enough houses are being built but we’ve known this for a long time. The knock-on effect, which we are just starting to see now, is that people turned to the private rental market and now rents are increasing to levels which people can barely afford.
“There’s a whole generation of people who are going to be too wealthy to go into social housing, too poor to buy their own houses and so the only option really left to them will be the private rented sector. These are the squeezed middle.
“We predict house prices are going to rise again in the future, as will rents.
“People tend to overstretch themselves because they want to live in the city.
“But ultimately, what people want is to own their own home, for lots of reasons, the main one being its a form of long-term financial security.
“Often, living in private rented accommodation means putting up with a leaky tap or a broken boiler and having a landlord you cannot contact.
“The average, the cost of renting in Leeds for a year is almost 50 per cent of the average salary. Renting a house is really expensive – a three-bed house in an okay area is almost the same as paying a mortgage.
“When I first came to Leeds, you could buy a two-bed house for £40,000. If I was moving here now and having just left university with £27,000 worth of debts with a partner who probably has the same and house prices around £140,000, you think actually, how would you ever make that add up?
“So, what other opportunity do these people have? Where are people going to live in a city like Leeds?”
Mr Warm says the solution to the crisis lies simply in building more houses.
“It comes down to a question of supply and demand. Over the last year 27,000 new families were formed in Yorkshire and the Humber and yet only 10,000 homes were built. This shortfall has gone on for a number of years.
“The number of new affordable homes built in Leeds last year, which is what our members build, was 550 – it’s a drop in the ocean.”
According to the National Housing Federation, only 9,480 new homes were built in the region in 2011/12, providing homes for just 36 per cent of the 27,000 people who need one.
It wants the Government to do more to encourage the building of new homes, especially on so-called brown field sites, which, unlike unspoilt green belt land, have been built on previously.
Mr Warm said: “The average house price in Leeds now is over £160,000 and average incomes are around the £20,000 mark. That doesn’t add up and so we need to find a way around that.
“We want brown field land to be released. We also need to change public opinion, so we need to say to people if they care about the community they live in, there needs to be homes people can afford to live in. Many people object to housing developments but if you ask them where they would like their children or grandchildren to live, it’s probably where they live now.
“People are often scared of the unknown, so they often oppose planning applications for new houses – Will it change the school? Will it clog the roads up?
“But those are the same people who, when their children are older, will ask why can’t they get on the housing ladder.
“The only thing that will stop house prices going up long term is to increase the number of houses there are. It’s too many people and not enough houses.
“This country has always built its way out of recessions,. House building has always been the bit that kick-starts the rest of the economy because it creates jobs. People see the value of investing in housing, so what we would say to the Government is it’s money well spent, those houses are still going to be there in the future.”
He conceded the Government had set up a £10bn loan guarantee fund for developers, including those building social housing but added that it did not allow them to plan beyond 2015, the argument being that without certainty of continued financial support from the Government, new homes will simply be too risky an option for any developer.
Mr Warm added: “The council owns land, as does the NHS. That land is not coming forward. Seacroft Hospital is a good example. We estimate we could build 783 homes on there. We need to have security to know funding is there to support the development of housing.
“But we also need the mortgage market to change so people can borrow more easily. It comes down to where housing is in the political priorities of Government and it needs to be right at the top.”
Councillor Peter Gruen, Leeds City Council executive board member for neighbourhoods, planning and support services said: “Clearly there are not enough affordable houses being built to meet demand in Leeds. Significant cuts in the Government’s housing programme have not helped, although it’s the fundamental problem of lack of access to mortgages which is preventing house building.
“Leeds City Council is doing its part. We’ve delivered around 1,500 affordable homes in the last three years, often using our land assets to make schemes work. We’ve also committed £9m over the next three years to build new council houses, £1.5m to tackle empty property and pledged any right-to-buy receipts we receive to fund housing associations. This action demonstrates the council’s total commitment to tackling this issue.”
He added: “The most shocking thing of all is that the first time house buyer, on average, is now 38. In my generation, we were getting our foot on the ladder in our early 20s.”