Councils and the housing crisis

This report by council leaders analyses academic and social policy research on previous and future economic downturn and warns that a series of inter-related economic factors are creating unprecedented demand for council and housing association homes, which councils are struggling to meet.

Concerns have been raised by council leaders that the bank’s aggressive lending policies over recent years have overheated the economy and brought misery to borrowers. The LGA is also concerned by the failure of the recent cuts in interest rates by the Bank of England and the £50 billion bail-out extended by the government to cash-strapped banks have not been passed on to consumers.

The report finds that factors which are set to push up the demand for social housing include:

• House prices rising by 156 per cent in ten years while wages have risen by just 35 per cent.
• Around 40 per cent of new mortgage offers withdrawn and deposits needed to get a mortgage have increased, making it harder for first-time buyers to get on the housing ladder.
• Second lowest mortgage approvals in 13 years, reducing demand for new-build where affordable housing is built.
• A 16% increase in repossessions compared to same period last year as people fall into negative equity or are made redundant.
• Housing associations struggle to secure loans to create new affordable housing due to the credit crunch.
• Developers reduce the amount they build and consequently the amount of new affordable homes reduces.
• Local authority and housing association new-build over the last decade is at its lowest since 1947. 
• An increase from 1 million in 2001 to 1.6 million households - or four million people - last year on social housing waiting lists.

 Councils and the housing crisis (PDF, 18 pages, 233KB)