Region’s housing market is ‘broken’

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Unaffordable house prices, rising rents and under-investment in affordable housing are making living in the East Midlands harder than ever.

That’s the warning from the National Housing Federation in a report published yesterday.

The East Midlands Home Truths 2011 report warns of “a broken housing market”, with the average home in the region costing £164,921 – more than eight times the region’s average wage of £19,947.

A league table of the top ten least affordable local authority areas in the region has South Kesteven (£182,570; 9.1 x £20,077 average income) in ninth place.

Across the East Midlands, the “affordability gap” looks set to worsen as the gulf between supply and demand continues to grow.

In total 10,090 new homes were built in the region in 2010/11 while 22,000 new households are expected to form in the East Midlands each year to 2033 – a rise of 25 per cent over 22 years. Furthermore, the average house price in the East Midlands is forecast to rise by 19.2 per cent over the next five years, from £153,200 in 2011 to £182,600 in 2016.

The level of home ownership in the region is expected to drop to 70 per cent in 2021.

Making matters worse, the East Midlands is also set to see the steepest increase in private sector rents of any English region over the next five years, rising by 25 per cent.

This means rents would increase on average in the East Midlands from £361 a month in 2011 to £451 a month in 2016, and tenants would be paying £1,080 more a year in total.

Chris Hobson, East Midlands lead manager for the National Housing Federation, said: “There is a desperate need for further investment in affordable and social housing in the East Midlands. This year’s Home Truths report shows that – despite a deep recession – house prices remain out of reach for thousands of households in the region.

“With house prices expected to rise, private sector rents predicted to rocket, unemployment on the up and benefits set to be slashed, low and middle income households in the region are in for an extremely tough ride.

“Lack of supply is at the root of the problem and more investment is needed as an urgent priority. Ministers need to act now to implement a range of measures to turn the tide on the current housing crisis, ensuring that homes continue to be built at scale in the East Midlands, that affordable housing options remain, and that housing is properly regulated across all sectors.”

l Are you affected by the property market problems? Let us know your experiences by emailing spaldingeditor@jpress.co.uk