The outlook will test the Prime Minister’s manifesto promise to “deliver the biggest boost to affordable housing in a generation”. In last week’s Budget, Rachel Reeves allocated £5bn to housing initiatives, including a £500m funding boost for the Government’s Affordable Homes Programme, which aims to build up to 5,000 homes.
However, Marcus Dixon, director of UK residential research at JLL, said that the next five years were unlikely to herald any radical changes in affordability, barring any future housing announcements.
He said: “House prices in the past two or three years haven’t necessarily kept pace with wages. In theory, comparing average wages with average house prices, if you’re going to buy, [homes] are a bit cheaper now than they were a few years ago.
“The problem with that is, the cost of borrowing has gone up. The increase in cost of borrowing wipes out most of the benefits of wages outpacing prices.
“On the rental side, that challenge is even more acute because, whereas house prices in the last two or three years haven’t kept pace with wages, rents have done and more so.
“The challenge around affordability, particularly in the rental market, is sadly going to continue in the short to medium term.”
Sir Keir has pledged to build 1.5m new homes this Parliament in an effort to tackle affordable housing by boosting supply.
However, JLL cast doubt on the Government’s ability to fulfil this promise. JLL estimated 1.2m new dwellings will be delivered in the next five years, falling short of Labour’s 2029 target by 300,000.
The property group flagged issues around planning, availability of builders and tradesmen, and struggles sourcing the necessary materials to construct that amount of housing as key issues that would stand in the way of Labour’s manifesto pledge.