Some would say the term is perfect. Others might look at it as patronising. A third interpretation is that it’s offering a way for young or less well-off people to clamber onto the housing market. But what does the term ‘affordable housing’ actually mean?
The term is usually found as an aspect of a party’s manifesto pledge to increase property availability for the young. A certain number of affordable homes might be promised when a property developer submits plans to a local authority for a new housing estate or entire development.
Clearly, what is ‘affordable’ to a multi-millionaire is likely to be unattainable to an 18-year-old fresh into work. And someone working on an average ‘London wage’ would find a mortgage easier to obtain if they reverse commuted an hour or two out of the capital, or saved up for a couple of years and relocated elsewhere.
According to the Wikipedia definition affordable housing is deemed as ‘affordable to those with a median household income’, which of course means that for 50% of the population affordable housing is never actually affordable. That’s a technical aspect, but the reality is blurred, simply because of the varying costs of homes and wages across the country.
A case in point from earlier this year was found via research from Shelter, which used slightly different criteria, using average earnings estimates for individual areas across the country to then calculate how much someone might then be able to borrow, before comparing that with the prices of properties in that area.
The results were stark, and worrying. The housing and homelessness charity, as reported in The Guardian, found that only 43 homes count as affordable for the average first time buyer in the whole of London – a paltry 0.1% of the entire number of homes in the city.
It’s terrible news for most, but perhaps not totally surprising that London remains out of reach to many. But the research also found that only 32% of homes in the north-west could truly count as affordable, and most damagingly only 16.9% across the country as a whole. The results do need scrutiny – young families were assumed to be aged 23-29 and have one or two children, for example – but the question remains: How can affordable be so unaffordable?
The confusion between what counts as ‘affordable’ has led to the proliferation of many terms such as low cost homes, intermediate, shared equity, and so on – all of which are presumably designed to designate their status as homes that are potentially available to those buying at the cheaper end of the market.
Successive governments are attempting to tackle the housing shortage problem, but you can take steps to help yourself. The advice might be to take the phrase ‘affordable housing’ with a pinch of salt, and treat each house purchase and sale on its own merits.
If you’re buying, the key advice is to start saving for a deposit early, perhaps before you’ve even thought of buying a home. Hit the bank of mum and dad if necessary.
If you’re selling, be aware that describing your property as affordable might be misleading to some. The definition of affordable seems likely to constantly change and mean everything to some and nothing to others.