Housing affordability is an issue because it is stretched for many people in this country. National house prices are near record highs relative to earnings (chart below) and rents in many London boroughs are over 50% of local earnings. The most popular explanation for this stretched affordability is a lack of new supply. But there are several different ways of measuring affordability and this suggests there are several different affordability-based challenges affecting local markets to varying degrees across the country.

For example, the high price of houses (and flats) tends to reflect the cost and availability of credit rather than a lack of new supply. Instead, a high and rising cost of housing (rents) is a much better indicator for a lack of new supply.

Meanwhile, mortgage repayments are well within historic affordable levels for most owner-occupiers, even recent first-time buyers. For many renters the barrier to home-ownership is saving up a big enough deposit. This deposit barrier means access to home-ownership for many renters is dictated by how much wealth their parents or grandparents can give them. This suggests a growing issue with social mobility. Meanwhile, for others, a bigger barrier to home-ownership is the lack of secure and well-paid employment opportunities. The issue is economic rather than purely housing related.

Affordability Issues:

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