UK house prices stop more than 1m buying homes, says research

Rising house prices have prevented more than 1.2m people owning their own homes since the coalition came to power in 2010, according to new research.

House prices across Britain have risen 17 per cent since the last general election, while wage growth has stagnated.

As a result the proportion of private tenants who cannot afford to buy has risen from 54 per cent to 69 per cent during the lifetime of the coalition, according to calculations by campaign group Priced Out.

In total nearly 3.8m people living in private rented housing cannot afford to buy their own home, up from 2.5m in 2010, Priced Out found.

In 2013 the coalition launched the most ambitious home ownership programme since Margaret Thatcher's 1980 Right To Buy scheme, which gave council tenants discounts to buy their properties.

To date 70,000 households have been helped on to the housing ladder through the Help to Buy scheme, which offers mortgage guarantees and deposit subsidies.

Chancellor George Osborne recently extended the scheme by creating a Help To Buy individual savings account, where the government provides up to £3,000 cash to subsidise first time buyers' deposits.

But for every one person who has bought a home with backing from Help To Buy over the past two years, another nine have seen house prices escalate beyond their reach, Priced Out's figures show.

The group used official government data on income distribution and house prices for the calculations. It assumed a home was affordable if it cost less than four times a household's income.

UK properties cost five times an average first-time buyer's earnings, according to Nationwide: this is close to the previous record high before the last housing crash in 2007.

Prices in London have broken their previous record and are now at nine times first time buyers' average earnings.

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"Throwing money at buyers with initiatives like Help To Buy is dangerously counterproductive," he said.

"If the next government is serious about reviving home ownership, its top priority must be to set about building enough homes to end price inflation, otherwise more and more people will become stuck in a lifetime of renting."

Sir Stuart Lipton, the doyen of British property developers, last month urged politicians of all parties to think more radically about the shortage of new housebuilding, which he called "as big a crisis as any in the country".

All the main political parties have pledged to increase housebuilding, although economists and academics have poured cold water on the plans. 

The Conservative party has said it will create 200,000 new "starter homes" for first-time buyers, priced at a 20 per cent discount to the market level.

The Labour party plans to exempt first-time buyers from stamp duty on homes worth under £300,000. It has also promised to crack down on poor-quality private landlords.

The Liberal Democrats want to build 10 new garden cities.

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