Bumpy ride predicted for housing in North-East

11:30pm Friday 10th September 2010

By Rachel Wearmouth

THE North-East faces a housing crisis with a growing demand for dwindling social housing and a stagnant private market, according to a new report.

Experts from the National Housing Federation said increasing need for social housing and the economic downturn are providing a recipe for a housing crisis.

Its Home Truths research forecasts the average home in the North-East will be 2.43 per cent more expensive in 2015 than it was in 2007 (£151,700 compared with £148,100).

Those hoping to buy in North Yorkshire face a larger increase – 4.52 per cent – with the average home rising to about £171,000 from £163,600.

The independent Oxford Economics predicted house prices countrywide will rise 22 per cent in the next five years as the growing need for social homes is not met.

It also said homeowners who bought during the 2007 peak will be in negative equity until 2014 (based on England’s average house prices).

Federation head for the North, Derek Long, said the next five years will be a bumpy ride for prospective homeowners.

“Even though price rises look sluggish for the next few years, affordability is not improving for many low-to-middle income households, as banks continue to restrict their mortgage lending and house prices remain historically expensive in relation to salaries,” he said.

“The Government’s decision to scrap regional house-building targets, withdraw funding for new affordable housing schemes and to cut budgets, means the future looks bleaker than ever for millions of people stuck on waiting lists.

“An entire generation could be locked out of the housing market for the foreseeable future, and people will increasingly look to rent an affordable home instead.

The Government must consider the huge impact of failing to invest in affordable housing.”

Glynn Hall, head of housing for Durham County Council, said the authority’s waiting list for social housing is getting longer as staff struggle to find a solution.

“Our priority is to supply an increased range of more affordable housing while, at the same time, encouraging an increase in the overall housing supply,” he said.

“We have more than 16,000 households on our register and this number is increasing.