It sounds laughable now, but it shouldn’t. When Co-Ownership bought its first homes in 1978, the average price of the properties we purchased was £13,000. If house prices had followed the retail price index since, a typical three-bed semi would cost around £90,000 now. Instead, our customers pay closer to £150,000 for the same house type.
These numbers tell the story of house price inflation racing ahead of wages and pushing affordability out of reach. This isn’t a housing market quirk, it’s a deep, structural shift that has changed who can own a home – and who can’t. Since the 1990s, house prices have consistently risen faster than inflation, and since the financial crisis in 2008, they have continued to rise even as incomes have stagnated.
In all the discussion on why prices continue to rise, one thing we must remember is that the proportion of people who own their own home has declined and the profile of the average homeowner has shifted. Homeowners today are likely to be older, in a higher income bracket, pay a higher multiple of their income on their mortgage, and had help from family to afford a deposit.
This is why the Communities Minister’s recent announcement is welcome. This £153m funding package will allow us to help 4,000 people become homeowners over the next four years. For each home purchased the funding will contribute around a quarter of the price, Co-Ownership will provide another quarter, and the customer funds the remaining 50 percent through the mortgage and deposit.
Shared ownership is a tried-and-tested model - it’s working. Around 90 percent of our customers go on to buy us out. The funding represents good value for Government’s investment. It reflects how effective shared ownership is in Northern Ireland. We will repay it as our customers increase their share in their home, gradually buying us out should they so choose to become full homeowners.
The Minister also announced an increase in the maximum price of a shared ownership property to £210,000, giving our customers greater choice across Northern Ireland. We hope it will provide our customers with better access to new-build properties.
Historically, between 30 and 40 percent of the homes Co-Ownership helped people buy were new build. Recently, this figure has fallen to below 20 per cent – not because demand has changed, but because Northern Ireland is building fewer homes, and those built are more expensive.
Whilst the building of new homes will require amongst other things more investment in our water infrastructure, new planning policy may help turn the tide. Of the eleven local councils in Northern Ireland four, with another two expected to follow shortly, will support the provision of “affordable” homes in all residential developments over a minimum size. Some of these homes will only be available through Co-Ownership - a game changer for our customers.
Despite the average house no longer costing £13,000, buyers need to be reminded that it is still possible to achieve homeownership, and that some things have improved since 1978.
Back then it was more difficult to get a mortgage. Many of our first customers were only able to get a loan through the Northern Ireland Housing Executive and there was often a waiting list for building societies. Mortgages requiring a low deposit of 5 or 10 per cent have risen to their highest level since 2008, and there is more competition in the market. There are now eight lenders who provide Co-Ownership mortgages, three of which do not require any deposit.
As unpredictable as the market may seem, shared ownership remains a constant – an alternative option, but a secure one. We look forward to continuing to offer hope and seeing 4000 into homeownership over the next four years.