Rising house prices will mean that the government’s starter homes initiative will be unaffordable for families on average incomes in almost 60 per cent of local authorities in England.
Shelter, the homelessness charity, found that families on average wages, forecast to be £48,919 by 2020 when the government said the homes will be completed, would be able to afford to buy starter homes in only 42 per cent of local authorities, while those on the national living wage would be priced out of all but 2 per cent of areas.
Single homebuyers on low or average wages would also struggle to afford a starter home in the majority of local authorities and, even when on a higher than average salary, three out of four local authorities would be off limits.
Shelter warned that the only group that the programme appears to help on a significant scale would be those earning high salaries, who should be able to afford a place on the open market without the assistance of government schemes.
David Cameron launched his plan for starter homes last year and committed to constructing 200,000 by 2020 for first-time buyers under 40. These homes will be built by private builders and sold at 80 per cent of market prices for no more than £450,000 in London and £250,000 in the rest of England.
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Shelter believes that these house price thresholds also mean that a number of local authorities would probably not build any starter homes because their house prices would go over the maximum amount to which the scheme would apply.
The problem is worst in London, the east and the southeast, despite high demand in these areas. In 36 per cent of local authorities in the east, 31 per cent in London and 61 per cent in the southeast, the house prices will exceed the thresholds for the programme, making it impossible to build any.
Campbell Robb, the chief executive of Shelter, said: “Before the election, hard-working voters were all promised a shot at a home of their own. But our research has proven that the government’s plans only work if you’re well off, and don’t plan on starting a family.”
He warned that the homes are not a good replacement for other forms of affordable housing and will not help most people on average wages struggling to afford a home. He urged the government to examine the policy before going down the wrong track.
Official figures from the Department for Communities and Local Government last week showed that housing starts fell by 14 per cent to 33,280 in the second quarter. The figure dashed hopes of an easing of the imbalance between supply and demand, which has been pushing up house prices.
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There were 136,320 starts for the year to June, down 1 per cent on the year before and below the 240,000 homes that the industry believes is needed each year to start to address the housing crisis that is stretching affordability.
As a result of the chronic lack of homes for sale, BNP Paribas Real Estate predicted that the average price would rise by nearly a third to £260,000 over the next four years.