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Cambridge sub-region Strategic Housing Market Assessment: www.cambridgeshirehorizons.co.uk/shma. Why is affordability important?. Increases housing needs registerReliance on private rented sectorLarger householdsOvercrowdingInter-generational issuesLonger commutes. Methodology. Rents
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3. Why is affordability important? Increases housing needs register
Reliance on private rented sector
Larger households
Overcrowding
Inter-generational issues
Longer commutes
4. Methodology Rents – Don’t include service charges
Mortgages – Repayment mortgage, 25-year term
10% deposit for outright purchase
£5,000 deposit for shared ownership
5. Cambridge City
6. East Cambridgeshire
7. Fenland
8. Huntingdonshire
9. South Cambridgeshire
10. Forest Heath
11. St Edmundsbury
12. Results The difference between renting a (reasonable) 1 bed property and buying a (poor quality) property of the same size is quite small
Renting is on the whole cheaper than 50% shared ownership
Purchasing a share of a 3-bed property may be cheaper than renting a 2-bed property
There is a large difference between social rent and other affordable tenures.
13. Percentage of population unable to afford lower quartile 2-bed property based on housing costs = third of income by tenure
14. Affordability Whether people are able to access a tenure based solely on whether they are able to afford it in terms of gross household income.
Based on spending one third of current household income on housing costs.
15. The coming year
16. The coming year (2) Estimated 07/09 lower quartile price = Jan 07 price in City and Fenland, Jul 06 price in Hunts and S Cambs and Jan 05 price in E Cambs
The credit crunch
No 100%(+) mortgages
2007 CML members lent £108bn in home loans and mortgages. June 2008 they announced that they “couldn’t justify £55bn”
Parental assistance
Cost of living
Buyers’ market psychology
17. Conclusions Housing affordability is a problem in the sub-region and is likely to remain so.
The implications of this are increasing HNRs, greater reliance on private rented sector, adults living at home longer (concealed households), overcrowding, greater commutes.
18. Questions?