UK household income has doubled in real terms during the past 50 years, and our spending patterns have changed. In 2013, basic necessities including food, accounted for a smaller proportion of the household budget, while more was spent on housing, leisure activities, travel and cars. In 1957 three items – food, fuel and rent, made up nearly half of all household expenditure. By 2013, the cost of housing including mortgage repayments, home improvements and rent had more than doubled and now take up 22 per cent of household spend, up from 9 per cent in 1957.
Meanwhile the strength of the housing market has been blamed for British households’ lack of savings. The proportion who save money has increased by only 6 per cent in the past 50 years – from 37 to 43 per cent. More than half do not put money aside regularly, and Capital Economics believes that the housing market has exerted a strong influence on the number of savers, as mortgages repayments absorb more of family budgets and savings are dismissed as a lesser priority.
A campaigning group, Splinta, wants sellers to keep the right to put their home on the market before their home information pack (Hip) is finalised. Currently, owners can market their properties as soon as they have commissioned a Hip, but from June this year, the Hip will be needed first. Splinta fears the move will be another blow to the ‘health of the housing market’.
According to fund manager Neil Woodford of Invesco, house prices will fall by up to a tenth this year, with the average home dropping by £18,500 or £50 per day. He warns that losses will be large for owners of new-build flats aimed at the buy-to-let investor, which he says are ‘almost unsellable’.
Repossessed homes are already ‘flooding the market’ according to Europe’s largest residential property auction house, Allsop. Almost 40 per cent of homes currently on their books are being sold by banks and building societies after repossessing them. This is double the proportion for the same time last year.
European governments and the European Commission are being urged to hasten the development of houses that produce no greenhouse gases and to better enforce green building codes as a report from the European Energy Network (ENR) is released today. The ENR says that national governments should prioritise the introduction of energy performance certificates that give a house an energy rating. Britain will be introducing certificates and have set a target of building zero-carbon homes, to start from 2016.