In this report, KPMG in the UK's Director of Public Policy, Mark Essex, argues that we need a new approach to the broken housing market - a mix of financial products and rental reforms.
For many years, governments have worked to give people access to affordable housing – but that goal has slipped further out of reach in recent years.
In the 1970s, the average home cost the equivalent of less than three years’ work at the average salary; by 2012, it was over seven years. Fast rising house prices have squeezed an ever growing slice of the population out of the housing market. Between 2003 and 2014 the proportion of home-owning households fell from 71 percent to 64 percent; however among those aged 25-34 it tumbled further, from 59 percent to 37 percent.
Meanwhile, rising house prices create social costs – many of which end up at the government’s door. Between 1979 and 2013, for example, housing benefit spending rose eightfold to £25 billion: that’s more than Whitehall gives our 400+ local authorities. And economically, the spiralling value of property pulls in vast capital investment – starving more productive sectors such as scientific research, services and manufacturing.
You can download our more detailed infographic of the UK housing market: Employer nominated housing: more housing, affordable rents.