What is wrong with the housing market?

by Mark Johnston

Almost everything to do with the property market is a huge problem at the moment!

The housing market is ‘lacking genuine direction’ because a squeeze on finance is chocking demand, according to mortgage lender Halifax.

The Council of Mortgage Lenders (CML) also says “we agree that there appears to be no clear trajectory for house prices at the moment, however this is not surprising considering the uncertainties currently found both on the supply and demand side”.

The National Housing association (NHF) recent published a report that showed home ownership is on a path of decline. It suggests that in 10 years time owner occupation rates will be back where they were in the mid 1980s.

New house building is at a post war low, mortgage lending to would be buyers is a problem due to ultra cautious lenders high deposit demands and strict lending criteria’s and private rents are rising strongly.

So why are not enough houses been built?

The home builder’s federation (HBF) has stated that fewer homes are being built in England now than at any time since the 1920s.

Local authority planning systems are too restrictive and some house builders say this is stopping them building homes in reasonable locations.

The recession and continuing economic stagnation has also had a big effect. Builders have found it much more difficult to borrow from banks to finance their businesses.

What about mortgage lending?

Melanie Bien, director of independent mortgage broker Private Finance suggests that “the first time buyer remains an endangered species, although house prices have fallen in some parts of the country the gap between incomes and prices remains insurmountable for many”.

Among the crippling array of problems facing first time buyers is the lack of mortgage availability. With lenders having tightened their criteria it is next to impossible for prospective buyers to find a cheap, affordable mortgage that does not require a deposit of 20% or more.


Being a tenant has always been a permanent way of life for millions of people and in previous years the growth of home ownership schemes, council and housing association housing saw the number of private rented homes shrink.

A ‘perfect storm’ has swept the property market, which has put homes out of reach of first time buyers and in to the hands of buy to let investors.

Over the past decade the buy to let landlord is now a big part of the housing scene.

Critics have argued that the rapid growth in the but to let industry has ‘crowded’ out many potential first time buyers. The Council of Mortgage Lenders (CML) figures show that of the 11.3 million mortgages approved this year, 1.3 million have been taken out by buy to let landlords.

With ever increasing numbers of people now ‘locked’ out of the house buying market and the population still growing the balance of supply and demand it seems has now tipped firmly in favour of landlords.

Matt Griffth of campaign group pricedout.org said “young people in particular now face the toughest housing environment in decades”.

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