ROOF Blog

Most Britons believe that house prices will rise this year as the country awaits official confirmation that the worst peacetime recession is finally over. A survey by Rightmove found that 53 per cent of those in the UK believe house prices will rise over the next 12 months, compared with just 10 per cent at the beginning of last year. The sharp upswing in confidence about one of the worst affected sectors during the recession comes prior to the publication of figures tomorrow that are expected to show the economy started growing again in the last quarter of 2009. Economists are predicting that the Office for National Statistics will say that gross domestic product increased by 0.4 per cent, which would mark the official end of the recession following six quarters of contraction.

Opinion is divided over whether buying or renting is the better housing policy.

Centre for Social Justice Executive director Philippa Stroud argues that property ownership is still one of the best defences against poverty.

Royal Society for the Arts chief executive Matthew Taylor counters that home ownership has increased social inequality in terms of the life chances and assets of people who own their own homes, arguing instead that we should foster a massive expansion in the private rental sector and improve the quality of the houses on offer.

Reckless lending to first-time buyers remains endemic in the financial services industry. An investigation by ROOF into the practices of leading banks and a mortgage broker found a worker with an income of £28,000 could borrow more than £153,000 from one high street bank. The repayments would have put an impossible financial squeeze on the buyer, bringing a serious risk of repossession. The amount the banks were prepared to lend in relation to the value of the property was also huge. Many offered an 85 per cent loan and one went up to 95 per cent. Kay Boycott of Shelter said, ‘With latest figures showing over 270,000 mortgages in arrears, it’s shocking to see banks continuing to lend to new borrowers based on such basic checks on their ability to pay. People are being encouraged into home ownership that may not be sustainable and potentially unmanageable debt. There is absolutely no point in giving a mortgage to someone who cannot afford it - every day we see the human fall-out from the repossessions that often follow.’

John Healey has revealed that the government plans to withdraw backing for the open market homebuy scheme, saying he wants to concentrate on new build home ownership schemes instead. The homebuy scheme has so far helped more than 14,000 people onto the property ladder and plans to close it have angered housing associations who administer the schemes.

Homeowners paid a record amount off their mortgages in the first three months of 2009 according to statistics from the Bank of England. An estimated £8.1 billion was repaid – the highest sum repaid since records began in 1970 – taking the total for the year to the end of March to £76 billion. From 2000 to 2008 homeowners had borrowed more than £300 billion against the raising value of their properties.

Shelter has rereleased research showing that thousands of homeowners with high risk sub-prime mortgages could lose their homes before the end of summer, after a survey found that more than 22 per cent of respondents are struggling to pay their mortgage. More than 160,000 households are either struggling or falling behind on payments are resorting to borrowing from friends, using credit cards or taking out loans to pay, while more than 35 per cent – the equivalent of 260,000 households – say they would be unable to met their mortgage payments if their income dropped significantly.

Fewer young people are living independently than ten years ago, and more households in the private rented sector are headed by young people aged 16-24 than in owner occupation and social housing combined, according to a study by the Chartered Institute of Housing (CIH). Young people say that they are excluded from home ownership and shared ownership because the costs are too high for them to meet.

The National Association of Estate Agents has accused the government of doing too little to help first-time buyers into the market and undermining the chance of a housing recovery. Research by propertylive.co.uk found that while the cost of mortgage finance has fallen to a record low, lenders are asking for such large deposits that the first rung of the property ladder remains out of reach. Nearly seven out of ten first-time buyers have given up hope of ever owning their own home. Of those who expect to buy a home, only 15 per cent think it will be in the next two years, and 5 per cent think it will be at least five years before they can afford it.

Despite falling house prices research from Circle Anglia has found that a third of Britons believe that home ownership is still out of reach to them. People living in the South West are the most pessimistic with 46 per cent saying they will not be able to own a house and 42 per cent in Wales feeling the same way. London had the lowest figure with only one in five worrying they will never be able to afford their own place.

Meanwhile a Norfolk family is one of the first to benefit from the homeowner’s mortgage support scheme. Ms Whitford fell more than £4,000 behind on her mortgage after she gave up her job, and now the family’s home has been bought by a housing association and is being rented back to the family. The housing association, Orbit First Step, is currently assessing 21 homeowners in the area to see if they quality for help, and has pledged £5 million during the next two years to the scheme.