Report cites concerns at soaring property prices

10:24am Wednesday 8th August 2007

THE average cost of buying a house in the region will continue to soar during the next five years - making the need for affordable homes even more vital.

A report by the National Housing Federation (NHF) says that average house prices in the North-East will hit £187,200 by 2012 and reach £211,000 in Yorkshire and Humberside.

This would represent a 32.6 per cent rise in the North-East, based on the average house price forecast for this year of £143,800, and 35.59 per cent in Yorkshire and Humberside where the average price is predicted to be £159,400.

The NHF, whose "Home Truths" report calls for 70,000 new affordable, social homes to built a year, predicted there would be a slowdown in the housing market over the next couple of years as a result of interest rate rises.

But from 2009, house price inflation would again rocket, as lower mortgage rates and a continuing housing shortage triggered another boom.

So-called "social homes" are often provided through local councils and housing associations with financial support being made available towards the cost of such properties.

David Orr, chief executive of the National Housing Federation, said: "Our projections show that it isn't going to get any easier to buy a house in this country.

"Unfortunately, soaring house prices are having a disastrous impact

"We are seeing families squeezed into poor housing; employers struggling to recruit key staff who cannot afford housing costs; and communities being torn apart as people move away in search of cheaper homes.

"Unless we do something radical about housing supply, we will see more overcrowding, more grown-up sons and daughters unable to move out of the parental home, and more households living in unfit homes."

The report said that since Labour came to power in 1997, house prices in the North-East had risen by 150 per cent, but average incomes had only increased in the same period by 30 per cent, failing to keep pace.

The average house price currently in the North-East is £136,317 - more than eight times average earnings (£16,744).

The report spelt out the growing demand for homes, with 95,359 households on the housing register in the North-East and 247,499 in Yorkshire and Humberside.