With the bidding open for the government’s £39bn Social and Affordable Homes Programme – the main pillar of its long-term housing strategy – homebuying affordability is front and centre. Yet with Help to Buy gone and no replacement support for first-time buyers, there is a chance these reforms won’t translate into actual delivery.
According to the latest e.surv House Price Index, average house prices across Britain rose by 1.8% year‑on‑year in February, proving that buyers face tightening mortgage affordability and higher deposits against an increasingly unpredictable economic and geopolitical backdrop.
Although the government promises the biggest boost to grant funding in a generation and a ten-year plan to rebuild affordable housing capacity, confidence remains fragile as the sector assesses whether this is enough to overcome viability and regulatory pressures.
Official ONS data shows that in England the average home now costs around 7.6 times the average annual earnings, underlining the fact that without a scheme to support home ownership, many will be priced out of the market.*
First time buyers are feeling these pressures most intensely. Recent geopolitical tensions are leading to market uncertainty, so lender caution is directly impacting mortgage offers. Buyers are seeing previously available sub-4% mortgages largely disappearing from their options, alongside a limited supply of affordable new build homes.
Prior to the instability, the removal of Help to Buy marked a significant turning point. While the scheme had its flaws, it provided clarity, scale and a nationally recognised route into homeownership. In Nationwide Building Society’s Housing affordability report, it is estimated that a typical first‑time buyer needs a deposit of around £23,000, which would take almost six years to save even when setting aside 10% of net income each month.**
As a result, many aspiring buyers are staying in the private rented sector for longer, adding further pressure to rents, while others are turning to shared ownership as one of the few available alternatives. However, shared ownership is not suitable for everyone and continues to raise affordability questions around service charges, staircasing and long-term costs.
These routes may help some households, but they do not resolve the underlying structural affordability challenge.
Geopolitical uncertainty is also reshaping affordability in less visible ways. Instability in global trade affects investor behaviour and the cost of imported materials, feeding directly into housing delivery. Currency fluctuations can push up the price of construction materials sourced overseas, adding further pressure to build costs.
Viability is a particular concern for smaller developers, who play a critical role in local housing delivery but are often least able to absorb cost inflation or regulatory change. Cost, combined with government pressure to meet new homes targets hosts a real risk to housing delivery.
Historically, e.surv analysis shows that sustained mortgage valuation activity feeds through into completed sales within two to three months, highlighting the risk that affordability and cost pressures, particularly for SME developers, could disrupt the pipeline just as activity begins to build.
At the same time, affordability pressures are being compounded by the growing use of estate rent charges on private housing estates. These charges, which are typically used to fund the maintenance of roads, lighting and green spaces, add an ongoing and often poorly understood cost to new homeownership.
For buyers already stretching to get onto the ladder, estate rent charges can affect affordability assessments and complicate mortgage access. In a market where affordability is already under strain, these additional charges risk further blurring the true cost of buying a home and undermining confidence at a critical point in the purchasing decision.
Affordability cannot be addressed through supply targets or short-term initiatives alone. A stable policy framework would give developers confidence to invest, lenders the assurance to support schemes, and buyers a credible pathway into homeownership.
There is an opportunity for the Social and Affordable Homes Programme to support practical measures that address many of the problem areas together. Although without that alignment, there is risk that ambition could outpace delivery, leaving affordability pressures unresolved. That means providing certainty on how grant funding will be allocated over the long term, how schemes will be supported through the planning system, and how developers and lenders can have confidence that today’s commitments will still apply several years into a project’s lifecycle.
Ultimately, affordability is not just a housing issue, it is an economic one. A functioning housing market underpins labour mobility, productivity and long-term growth. Bridging the gap between ambition and reality will require political commitment to stable and consistent policies along with a honest assessment of the structural barriers that hold delivery back.
If the Labour party can manage this, we will looking at a stable and investable housing market that not only can deliver affordable homes but can also deliver a great degree of confidence to consumers and property professionals alike.
