Is the door being slammed shut on home ownership for a generation in Suffolk and Essex?

House prices compared to earnings (Image: Archant)

Home ownership is becoming a distant dream for the region’s young people, an investigation can today reveal, with the scale of challenges facing first-time buyers now described as reaching “crisis” levels.

While house prices in Suffolk and north Essex have more than trebled over the past 20 years, official figures show wages have failed to keep pace, creating an ever widening gap in affordability.

With average prices in parts of the region now more than nine times median earnings, some young people say they cannot imagine owning their own home. And those who have managed to take that step claim to have made huge sacrifices to do so.

Luke Cresswell, 27, has been on the housing waiting list for six months with his fiancé, and now their newborn baby, but with no properties being offered to the family, they have been living with his brother.

Bradley Wood, pictured with his girlfriend Karina Youngs and their son Lucas. (Image: Archant)

“Saving for a deposit either for a rental or a mortgage is just beyond thinking about as we just get by,” Mr Cresswell said.

He said housing shortages, and a lack of council homes, had put pressure on lettings, and resulted in a “denial of opportunities” and “growing insecurity”.

“For younger generations, those without access to the bank of mum and dad for the significant deposit needed to buy, or already loaded down with education debt, have expectations of ever owning any home dashed completely,” he added.

Across the UK, house prices have been rising steadily since the 1980s, with successive governments facing criticism for failing to ensure enough new homes are built. Specific policies such as selling off council homes and reductions of social housing supply are said to have worsened the problem.

Luke Cresswell (Image: Archant)

The charity Shelter says the housing crisis is a national issue, with “house prices having vastly outstripped wages, leaving homes more unaffordable across the country”.

However recent reports show the eastern region is among the hardest hit, with parts of Suffolk showing particularly rapid growth in prices.

The National Housing Federation’s Home Truths report published in November said there was an “acute housing crisis in the East of England” with the income required for typical 80% mortgage in Suffolk Coastal now more than £60,000.

Meanwhile, official government statistics show that house prices in Babergh have almost quadrupled since 1998 – the steepest increase locally – although earnings in the district have risen by just 40%.

Recent analysis by the Trades Union Congress (TUC) found that real-term earnings had fallen by 10.4% in the region from 2008-2015.

The Government’s social mobility index, published last month, highlighted further problems for Suffolk, with outcomes for poorer people living in Waveney, Ipswich, Forest Heath and Babergh among the worst in England.

Parents in the worst affected parts of the region say the growing gap between house prices and wages has forced their children to move away from their family to places where properties are more affordable.

Sarah Page, a Sudbury town councillor and mother-of-four living in Great Cornard, said her children had struggled to find housing locally after returning from university.

“Young people simply can’t get on the housing ladder as prices are disproportionately high compared to wages locally,” she said. “Therefore young people are forced to live at home until their 30s or privately rent. Once privately renting, as rents are so high, they can’t afford to save a deposit to buy a home.”

According to figures from Halifax, the average deposit paid by a first time buyer in East Anglia in 2015 was £33,599 – up 13% on the previous year’s figure and 88% higher than in 2007.

Craig McKinlay, mortgages director at Halifax, said the ratio of house prices to earnings was a concern that “could prevent many potential buyers from entering the market”.

Bradley Wood, 26, is hoping to finalise the purchase of his family’s first home in Ipswich in the coming weeks after seven years of saving.

Despite earning more than the region’s average wages, Mr Wood said finding a lender had been difficult for first-time buyers, while the hidden costs of moving had added unforeseen challenges.

“We’ve had to cut back on holidays and make quite a few sacrifices,” he added

The future shows little sign of improvement for first-time buyers. The Royal Institute for Chartered Surveyors’ UK Residential Market Survey, published in December, found “price expectations carry on rising fastest in the East of England”. The survey predicted that house prices in the region would increase by a further 5.4% per annum over each of the next five years, compared with a UK average of 4.5%.

And with too few homes being built – particularly those classed as affordable – questions remain about how the problems can be addressed.

The Department for Communities and Local Government said it had “set out the biggest, boldest and most ambitious plan for housing in a generation”, including £8billion to deliver over 400,000 affordable homes by 2020. Planning authorities in Suffolk and north Essex have also stressed their commitment to delivering new homes, highlighting several new schemes to kick-start the housing market. However, James Hopkins, one of the region’s most prominent private housing developers said that despite recent government initiatives there was still too much bureaucracy to enable sufficient levels of new housing.

- Tomorrow we look at why the housing crisis has arisen in the region and what its most serious effects have been.

Case study: “It took seven years to save for our first home”

Bradley Wood, a 26-year-old business analyst from Ipswich, said that after years of sacrifices he was hoping to finalise the purchase of his family’s first home.

He and his girlfriend, Karina Youngs, have been saving for the past seven years to afford the mortgage on a home.

“It’s been difficult, to be honest,” he said.

“We’ve had to cut back on holidays and make quite a few sacrifices.

“From a financial perspective it’s not been easy.”

Mr Wood earns around £40,000 a year in his job, while his girlfriend works part-time around her studies.

Despite earning an above average wage, he said it had been a challenge to find a willing lender. And although the couple had looked at some of the initiatives intended to help first-time buyers, such as shared ownership and the government-backed 5% deposit scheme, Mr Wood said there were hidden costs associated in the long term.

Even after finding a suitable mortgage offer, he said the additional costs, including stamp duty and local authority fees, had meant he needed to find another £5,000.

“It’s becoming more and more difficult for people to save up what they need,” he said.

Case study: “Saving for a deposit is beyond our thinking”

Luke Cresswell, 27, who recently became a father for the first time, has been on the housing waiting list for six months with his fiancé, and now their 11-day old son.

They currently live with Mr Cresswell’s brother in south Suffolk, who he says has been “very good” though having a newborn baby is difficult.

“Saving for a deposit either for a rental or a mortgage is just beyond thinking about as we just get by,” Mr Cresswell said.

He said housing shortages and a lack of council homes had put pressure on lettings and resulted in “growing insecurity”.

“For younger generations, those without access to the bank of mum and dad for the significant deposit needed to buy, or already loaded down with education debt, have expectations of ever owning any home dashed completely,” he added.

“The so-called free market in housing has been a recipe for social divisiveness, increased inequality, the inter-generational denial of opportunities and, for too many of us, a source of growing insecurity.”

Mr Cresswell said council homes were once seen as a “popular and welcomed solution” but now carry a

“stigma”.

He called on the Labour Party, of which he is a member, to commit to the “mass construction” of council homes and to extend their availability to low earning people currently pushed towards the private rental market.