Times get tougher for house hunters

May 10 2008 by Adrian Pearson, The Journal

Urban housing pressures are at an all time high, whether renting or trying to buy your first home. As the Government looks for ways of solving the nation’s housing woes, Northern housing organisations are facing increasing pressure on their dwindling resources. Adrian Pearson reports.

AS Gordon Brown continues with plans to woo voters by building three million new homes across the country, Newcastle housing experts have warned the situation in the North East will get worse before it gets better.

Predictions of a serious downturn in the economy, high street lenders refusing more would-be homeowners than ever before and a rising waiting list for social housing vacancies are just some of the problems facing city leaders.

Affordable housing is a hot topic for many city planners and politicians, as more and more families begin to realise that even with the drop in house prices, they are still priced out of many areas.

But the problem is that there is very little the Government can really do.

Ministers want to build millions more houses but know this will take nearly a decade.

They also want to see house prices become affordable but are desperate to avoid a return to negative equity and rapidly falling house prices.

In Newcastle, as elsewhere, the prediction is that more people will be renting for longer as they wait for a better time to enter the housing market.

And for social housing groups such as Your Homes Newcastle (YHN), the truth is that they are just as vulnerable to the changing fortunes in the market as the private sector.

YHN is an Arms Length Management Organisation run on behalf of Newcastle Council.

It takes care of the council’s housing stock, though to look at their adverts you would think they were the same as any other lettings estate agent.

Chief executive John Lee says he sees on a daily basis the realities of demand outstripping supply.

“We’re increasingly seeing people from a larger variety of backgrounds. It’s less and less about the stereotypical image and more about families that just can’t get on the housing ladder.

“These days we are seeing a lot more applications from people who would not normally consider us an option.

“The problems involved are just as harsh for families of any background and there’s a significant increase in applications that comes because of the way the housing market is at the moment.

“Every day we have to make hard decisions to see who gets a home and who has to wait. It can be very difficult, and yes we have system in place to ensure it is fair but you are still going to have the emotive arguments.

“If I have a letter from a soldier telling me he has fought in Iraq and wants to move home, is he more deserving than a family of four who have been trying for a year to move out of a house to small for them?

“There is a huge gap between what people expect is available from social housing and what we can actually provide, but we do our best for them.”

The weekly figures at YHN show the true extent of the problems facing Mr Lee.

The organisation is responsible for some 30,000 properties, most of them occupied. This is down from around 50,000 more than 20 years ago, a number which has been steadily chipped away at through right-to-buy sales. And once council homes started to be sold in at massively discounted prices, local authorities quickly stopped building loss-making properties.

YHN will advertise for rent some 55 houses each week. This may seem a lot, but just five years ago that figure was 90.

And while five years ago there were 11 bids for every house, today staff have to decide the pros and cons of more than 40 bids for each house.

The situation gets worse in the more desirable parts of Newcastle. A house recently advertised for rent in Heaton attracted more than 300 bids.

And the problems Mr Lee experiences are repeated across the North East. Monica Burns, regional housing manager for the National Housing Federation, agreed that the situation would likely get worse in the short term.

She said: “What we are seeing is the long term impact of the sale of council houses.. Many people were persuaded to move into owner occupier status, and a lot of people cannot now afford that and we are seeing them approach housing associations and local authorities looking for accommodation...

“And as we see more fixed-rate mortgages dry up we will really begin to see the real impact of selling off all those homes as people find they can no longer afford to keep up with repayments and begin considering what options are open to them.”