We English love to think of ourselves as Kings and Queens of our castle, no-one else in Europe feels quite the same way as we do about our beloved patch! Margaret Thatcher’s controversial right to buy policy from 1980 gave the aspirational working class the opportunity to buy their council homes at a much discounted price, which lead to a steep rise in home ownership over the following 2 decades. Today, however things are changing. So why has the market slowed? Since the turn of the century, high house prices and weak income growth has brought about a steady decline in home ownership, it’s increasingly difficult to get a foot on the property ladder – despite low interest rates and government subsidies for first time buyers. Between 2000 and 2014 average earnings rose by 51% but house prices rose by a whopping 132% ! The younger generation – or Generation Rent, is now expected to pay far more than their parents did to get a mortgage, and salaries are just not allowing for it.
In London private renters outnumber homeowners for the first time in over a decade. It’s not uncommon to see young families being priced out of the housing market, but this isn’t necessarily all doom and gloom. Maybe we need to take a leaf out of Germany’s book, they have the greatest proportion of renters in Europe where only 39% own their own homes, compared with around 60% of Brits. Why? Well having a large mortgage is a huge commitment and people just can’t be bothered! But isn’t home ownership a crucial cog in any healthy economy? Well, in Spain around 80% of people own their own homes but unemployment is around 27%, and 39% own in Germany with unemployment at 5.2%, so I think that answers that question! The housing market is clearly evolving and rather than panic perhaps we should be embracing the change.
Ref: Quartz Media, The Independent, The Guardian