Parents are worried sick about getting their children on the housing ladder. But politicians just don’t get it

THE lack of affordable housing is arguably the gravest problem facing this Government. In my own city, Oxford, the price of an average home is £340,000: nearly 12 times the average salary.

Admittedly, Oxford is said to be the most expensive city for housing in Britain relative to average salaries, but there are many other places in Southern England — and not a few in the rest of the country — where a grotesque disparity between income and house prices prevails.

How does a young person or a couple get on the housing ladder when property prices are so astronomical, and a minimum deposit of more than £30,000 will be payable? Unless you work for a hedge fund or investment bank, you may well have to turn to the Bank of Mum and Dad.

The trouble is that many young people do not have parents in a position to help out. Either they don’t have sufficient assets or, if they do, these are tied up in a family home, which they may, understandably, not want to sell. In short, the Bank of Mum and Dad is in many cases either insolvent or illiquid.

This is the predicament of millions of people. The middle-aged worry that, at any rate until they pop their clogs, their children won’t be able to afford their own homes. And the young often think they are being denied opportunities that were available to their parents and grandparents. The ladder has been yanked up.

According to a report by accountancy firm PwC, things are only going to get worse. The number of new homebuyers is predicted to fall over the next ten years as the high cost of raising a deposit locks many people out of the housing market.

Home ownership levels, which reached 71 per cent in England in 2003, stand at about 64 per cent now, and are certain to decline further. For those under 40, renting from private landlords will increasingly become the norm.

This is likely to presage a far-reaching revolution. And it is one — ironically enough, in view of the present pitiable state of the Labour Party — which should make Tories extremely nervous about the long-term prospects.

PERHAPS the central pillar of modern Conservatism is the notion of a ‘ property-owning democracy’, a phrase coined by the Tory politician Noel Skelton in 1923, revived by Anthony Eden in 1946 and triumphantly put into action by Harold Macmillan as housing minister in the early Fifties. The idea lay behind Margaret Thatcher’s sale of council houses in the Eighties.

She rightly believed that if people had a stake in society conferred by the ownership of property, this would encourage them to be hard-working and resistant to the confiscatory policies of the Labour Party.

But will today’s so- called Generation Rent vote Tory? I certainly wouldn’t count on it. Many of its members may feel alienated and cut off from opportunity. The PwC report puts it well when it says: ‘The inability of many to get on the ladder may limit [the] avenue to social mobility in the future.’

I mention the link between high levels of home-ownership and the fortunes of the Tories not so much because I fret about the future of the party. I just wish that its leading lights gave more thought to the dire consequences of the fall in home ownership.

Two main factors continue to restrict the supply of affordable homes. One is the extreme shortage of building land. The other is mass immigration, which has been boosting population growth at a time when we are building less than half as many homes as we were 50 years ago.

Of course, I recognise there have been intermittent announcements from the last Government as well as this one about freeing up land for housebuilding. Only two days ago, George Osborne said that ministries are going to sell off vast swathes of land, which is intended to create space for 150,000 new homes by 2020.

That’s all well and good, but 150,000 homes over five years represent only a small proportion of what is needed. Only 141,000 homes were built last year, which is about half of what we should be producing year in, year out.

The truth is that there isn’t a large enough supply of new houses in the right places.

I wish the countryside could be entirely protected from new developments, but I’m afraid it can’t. The Government must redouble its efforts to force the development of ‘brownfield’ sites.

As for uncontrolled immigration, its past effects on the housing market obviously can’t be undone. It is thought immigration accounts for at least a third of all housing demand.

With immigration at very nearly an all-time high, it’s hard to be optimistic about the ability of this Government to get a grip on numbers. Indeed, many believe that the rapid increase in the living wage envisaged by Mr Osborne is likely to boost immigration, which may not worry him at all.

BROADLY speaking, the Chancellor and the Treasury are in favour of high levels of immigration to satisfy the requirements of the labour market. Unfortunately, one effect of this policy will be to put further strain on the already inadequate supply of new homes.

In parts of London and the South-East there is a further problem: the presence of rich foreign buyers who snap up desirable properties, which they leave empty or rent out, thereby disadvantaging prospective indigenous buyers. Sometimes the free market has to be tamed: there should be disincentives to foreign ownership such as exist in other advanced countries, such as Switzerland.

All in all, despite the Government’s evident good intentions, I’m not very hopeful about either its capacity or its will to turn things round. The likelihood is that at the end of this Parliament, house prices will be significantly higher in real terms, the shortage of affordable homes will be more acute and the number of people buying their own homes will have slipped further.

And what will the Bank of Mum and Dad then do? The Chancellor’s recent announcement that the inheritance tax threshold for couples is going to be raised to £1 million from 2017 was welcomed in many quarters, but it will do little or nothing to help Generation Rent, at any rate until its members are well into middle age.

Where it is possible, parents will downsize to help their children — a few of my friends are already doing so. But the twilight years can turn out to be longer, and more expensive, than many older couples bargain for.

Moreover, they face unquantifiable care home fees. Last week, the Tories reneged on their promise to raise the cap for these costs to £72,000 next year, an undertaking that will now supposedly be fulfilled in 2020.

Fortunate — and rare — is the Bank of Mum and Dad that can afford to downsize while retaining sufficient assets to avoid the pitfalls of old age. Fortunate — and rare — are the children of such people.

The growing scarcity of affordable housing is one of the great issues of our time. Labour funked it, and so, largely, did the Coalition. The Tories, alas, have scarcely begun to grasp the magnitude of the problem.