Affordable homes

In recent years the proportion of people owning their own home has fallen in the UK. This concerns me, especially as many people would like to own their own home but find at current house prices that is either difficult or impossible.

Present mortgage rates are helping. The typical interest rate at the start of a first time buyer’s mortgage is between 2.4% and 2.6%, rising to 4% to 5.7%. These rates are low compared with the rates past generations faced, making early years repayments more affordable.

The problem is the price of the property. In the Reading area a first time buyer can get a one or two bedroom flat for less than £170,000. The lower priced properties tend to be in Reading town rather than in Wokingham or the villages around. A £150,000 mortgage starting at 2.4% requires monthly payments of £664-£676.

This will be possible for some young people earning around the national average. For those on lower pay there are shared ownership options where the capital cost is far less.

I am discussing with the Council what more can be done to improve the range of affordable homes for sale and for shared ownership, to see if more can get a foot on the property ladder.

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2 Comments

  1. CHRISTOPHER HOUSTON
    Posted February 9, 2015 at 1:05 pm | Permalink

    It has been hard for someone in the north of England, Scotland or Wales to quite understand the relatively high prices of homes in the south and why any employer British or foreign would seek to create industry there as a preference…as salaries have to be high
    The general overheads would be too great unless people in the south of England are four times more productive than elsewhere which many employers I’ve spoken with categorically deny.

    There does seem an earnings and property bubble which the rest of the world will at some stage burst. I do not believe young people should be given any encouragement whatsoever to take on loans/mortgages. Their salaries cannot be secure.

  2. petermartin2001
    Posted February 9, 2015 at 1:48 pm | Permalink

    You might like to consider that Government can do itself a favour, by reducing its deficit and at the same time by making a dent in the problem of home affordability.

    Say it puts up money for a residential development. That money wouldn’t have to be spent directly by government. It could be on contracts to the private sector, who would spend in on architects’ fees, contracts to building firms etc. Nearly all of that money would be spent on salaries. Either directly in the form of builders’ and architects’ wages and salaries, or in the wages and salaries that were part of the prices that were paid for bricks, tiles, concrete and other building materials.

    So straightway some 30-40% would come back as taxes and NI payments. The remaining 60% would eventually come back to government on way or the other as it was spent and re-spent in the economy. Every transaction would generate a tax payment or one kind or other. Eventually it would all come back. Where else can it go? At the same time it has helped keep workers off the dole and saved on welfare payments.

    Then government takes possession of the properties which have been built and sells them. It gets back, at least, all the money that it originally put up. But it has already got it back through taxation. So, government ends up by making a tidy profit!

    So, you see, government spending doesn’t have to be considered lost money. Government just needs to be a bit smarter on how and what money is spent on, and how much is spent. Government needs to consider what happens to the money afterwards and where it is likely to end up. It also needs to be aware of the inflationary consequences of spending. The above type of deficit reduction can only work when there is spare capacity in the economy, as there is now.

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    John Redwood won a free place at Kent College, Canterbury, and graduated from Magdalen College Oxford. He is a Distinguished fellow of All Souls, Oxford. A businessman by background, he has set up an investment management business, was both executive and non executive chairman of a quoted industrial PLC, and chaired a manufacturing company with factories in Birmingham, Chicago, India and China. He is the MP for Wokingham, first elected in 1987.

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