I have been reading a report by the Resolution Foundation this week and it is looking at levels of Home ownership. They have quoted figures from the Labour Force Survey which suggests a downward trend of home ownership since the UK highs just after the turn of the Millennium.
The % of people owning a property in the UK had been increasing steadily until early 2000’s when it started to drop. The figure for home ownership currently sits at 63.8% of the UK population. The last time we saw this level of home ownership we have to go back to 1986. House prices were much cheaper then but remember average mortgage interest rates were around 9%.
If we look at the East Midlands the figure currently sits at 67% which is still quite a drop from its peak of 75% in 2004.
The average house price for first time buyers is around £150,000 these days and this means a deposit of around £15,000 needs to be available to secure a decent mortgage product. First time buyers are getting older when they purchase their home, in the UK it is currently 30 years old. Buyers are likely to be looking for a property that will give them the space for a family so it can take longer to save.
A consequence of this trend is the growth in the private rented sector. I am always talking about how the attitude towards renting has changed over the years and how it has become more of a lifestyle choice than a short term necessity. But more about that in next week’s article.
When you look at rental levels at the peak of home ownership in the East Midlands (October 2004) the percentage of people in the private rented sector was 8%. It is currently nearer 18%.
The figures show the numbers of people renting is increasing and this is exactly what we have seen in our office. It’s not just the volume of renters, those who are living in a rented property are staying put for longer. It is taking longer to save for a deposit or to find the right property to buy with so few coming onto the market for sale these days. One thing is for sure it’s a great time to invest in rental property!