A cooling housing market won’t automatically ease cost of living pressures

Commenting on the latest ONS figures today (Wednesday) on house prices and the Prime Minister’s speech at the National Housing Federation, Dan Tomlinson, Policy Analyst at the Resolution Foundation, said:

“The UK’s housing market shows some signs of cooling, with growth in the house price index slowing to its lowest level since 2013. But we should be cautious about thinking this signals an imminent easing of cost of living pressures.

“This slowdown is driven almost entirely by trends in London and the South East. House price rises are still outpacing wage growth across many other parts of the country.

“There are also good and bad house price falls because what really matters is how much of a families’ incomes is devoted to housing costs. In so far as the recent slowdown reflects worries about lower income growth for British families, it is hard to see it as good news for living standards.

“The reality is that home ownership will remain far too distant a dream for many young people, who are likely to remain renting for some time. So it’s good to see the Prime Minister signalling a shift in attitudes towards renting by reforming tenancies in the private rental sector and announcing a £2bn boost to increase the supply of affordable social housing in the 2020s.

“However, far more will be needed if we are going to turn around the locking out of young families from our social housing stock.”