The National Housing and Planning Advice Unit has developed three new affordability indicators to show the ability to access home ownership and the affordability of maintaining a mortgage or renting in the private sector.
In the past decade there has been a deterioration in the affordability of homeownership while the affordability of private renting has remained broadly stable. In response the Unit developed three new indicators: the deposit measure – deposit required as a proportion of take home household income, mortgage cost- the costs as a proportion of take home household income, and rents – the rent as a proportion of take home household income.
In preparing these indicators the Unit has sought to use measures that reflect the homes that first-time buyers actually buy and the incomes that they have, within the limitations of the available data sources.
In many cases more than one income is used to pay the mortgage or the rent. To reflect this, the Unit has constructed a ‘typical household’ income which consists of one lower quartile earnings and one median earnings, this reflects both the typical income and the relative earnings in a young two earner household.
The National Housing and Planning Advice Unit was established in response to the pressing issue of housing affordability highlighted by Kate Barker’s Review of Housing Supply. It is a non-departmental public body, sponsored by Communities and Local Government, designated to provide independent advice on affordability matters to the Government, Regional Assemblies and other stakeholders with an interest in the housing market.
The document is available from CLG. http://www.communities.gov.uk/documents/507390/pdf/1465717.pdf