Broken from top to bottom

It’s widely accepted that England has something of a two speed housing market. The narrative usually goes like this – in London and the south east, real estate is as much an investment as a home, creating a frenzy of competition between investors, foreign buyers, commuters and local residents that bump up house prices.  Further north, house prices are falling, with low sales, higher numbers of empty homes and worrying pockets of high housing debt.

The natural conclusion might be that where prices are lower, homes are more affordable. But affordability is really about the money you take home every month versus the cost of your housing.

The money you’ve got is often determined by the state of the local jobs market and average wages, which can be totally out of step with the cost of housing in a particular region.  Within a region, the picture can become even more complicated – a recent IPPR report into housing in Bradford, for example, found that those in the poorest and cheapest areas of the city spent proportionately more of their income on rent.

Today, Shelter has released new research showing where the nation’s repossession ‘hotspots’ are – those areas where the highest proportions of homeowners are at serious risk of losing their homes. We find huge variation across the country, with the greatest number of hotspots clustering around the north west and the north east, and a couple of stand out areas in the south, including Barking and Dagenham, Lewisham and Thurrock.

Of the top ten hotspots nationally, five are in the north west. What does this tell us? Firstly, the cluster of repossession risk hotspots in the north reflects economic conditions, to some extent. Home repossessions are often triggered by job loss or other loss of income, and our analysis shows that unemployment is higher, and has risen faster, in the areas where risk of repossession is highest.

However, the truth is that anyone can get into mortgage arrears; an unexpected life event, whether it’s illness or the break-up of a relationship, can easily throw families into a spiral of debt.

More recently this has been exacerbated by the ongoing squeeze on household finances. Housing costs take up a large chunk of most people’s take-home home pay. We know that many families have made huge sacrifices – including cutting back on food and fuel – to keep up their mortgage payments. But ultimately if your pay isn’t rising and the cost of everything else is, it’s difficult to keep budgets on track.

The high cost of housing affects all of us. While prices might be most out of control in London, this report clearly shows that the Northern market is dysfunctional too, with worryingly high numbers of households falling behind on their mortgages and facing the threat of repossession.

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