The number of first-time buyers relying on family loans is now at a historic high, according to new research from the Social Mobility Commission: one in three rely on family help, and the proportion of 25- to 29-year-olds who own their home has almost halved since 1990.
A world where a growing proportion of young people can only afford to buy a home with family support makes a mockery of equal opportunity. Home ownership matters: yes, as loft remarked, it is a cultural aspiration; but one that is underpinned by rational financial interests. Home ownership provides a stability and financial security simply unavailable to those who rent, thanks to house price growth that benefits owners but drives up rents, and our very weak framework of tenants’ rights.
The success of government attempts to improve housing policy should be judged by a simple indicator: price. For decades, governments have rolled out policies aimed at improving affordability and helping people to get on the ladder, but at the same time long-term house price growth has far outpaced any increase in wages.
The biggest problem is a land market that serves landowners and developers at the expense of buyers. Land is a fixed commodity and a public good: its sale should be highly regulated. Yet our planning system delivers huge windfall gains to landowners in areas of high demand: giving agricultural land residential planning status increases its value on average by a factor of 328. Landowners sell to developers offering the highest price, who maximize profit by slowly releasing houses on to the market to fuel further price growth, skimping on build quality and affordable housing.