House prices in London are going through the roof, pricing ever more people out of the housing market and fuelling an “increasing social divide”, according to a recently released report.
“London is increasingly a city of housing ‘haves’ and ‘have nots’. For the ‘have nots’ the situation is already dire,” the report says. “Average house prices in the capital are now nearly nine times the average salary.”
The report highlights how London house prices have increased 139 percent since 1997, while wages have only risen 34 percent. Mortgage providers typically lend up to 3.5 times your annual salary - meaning you have to earn £80,000 a year to afford an average London house.
This comes at a time when the amount of cheap rental accommodation being built each year is “dwarfed by the number lost through right-to-buy”. The result is to force workers into insecure and expensive private rented accommodation.
“The housing market is increasingly restricted to people who are already wealthy, who have wealthy parents, or who already have equity, leading to an increasing social divide,” the report says.
The government’s response to this worsening crisis is, predictably, to put its faith in “market solutions”. Last month it launched “Open Market Home Buy”, a loans scheme which replaces previous subsidies for “key workers” such as teachers and firefighters.
But this approach, based on property ownership, has been criticised by housing activists.
“The key worker living scheme is beneficial for some first time buyers who would otherwise be unable to enter the housing market,” a spokesperson for Shelter told Socialist Worker.
“However, Shelter is concerned about the poor targeting of the subsidy, and in particular the widening of eligibility to include any household on the waiting list for social rented housing.”
“Shelter also has broader concerns about the potentially damaging effects of presenting home ownership as the only tenure of choice. Encouraging lower income households into home ownership will only lead to a risk of homelessness and poverty.
“What is really needed is a shift in government priorities from helping people to buy to providing new affordable rented homes for those in the greatest need.”
The report was produced by the National Housing Federation, an umbrella group of housing associations. Unsurprisingly, it pushes housing associations as the ideal provider of “affordable housing” - but makes no mention of council housing.
“Extra investment in council housing is vital if we are to improve living standards for ordinary working people,” Jon Cruddas, Labour MP for Dagenham in east London, told Socialist Worker.
“House prices are pushing people out and the law is stacked against councils investing much needed public money in new homes. We need a change in policy to make sure council housing stocks are redeveloped, and new, better houses built.”