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Rate of home ownership in England at lowest level for 30 years
After rising almost continuously over the course of the twentieth century, the rate of home ownership in England has been declining steadily since 2003, the annual housing survey shows. The report published by the Department of Communities and Local Government shows that in 2013/2014 home ownership fell from 65.2% to 63.3% and is now at its lowest rate for almost 30 years. Indeed it is some 8% below the all-time high of 70.9% in 2003 and among owner occupiers, the proportion of people owning their home outright overtook the proportion owning with a mortgage in 2013/2014. The data reveals a sharp decline in the proportion of younger people owing their own home, particular those aged 25 to 34 who are traditionally first time buyers who are vital to the housing ladder. But the number of this group owning their own home fell from 59% in 2004 to just 36% in 2014. Over the same period, the proportion renting, either privately or through a local authority or housing association, increased from 41% to 64%. For 16 to 24 year olds, the proportion renting increased from 76% to 91%. The increase has occurred in the private rental sector, which currently houses 19% of total households in England, the highest share since the 1960s. Indeed, over the last decade the number of privately rented households has nearly doubled to 4.4 million, while the percentage of households in social rental properties has declined from 18% to 17%. The survey suggests that 25% of people in social housing and 61% of those in the private rental sector expect to be able to buy their own home in future. However, this remains a longer term aspiration, with around half of renters expecting it to take five years or more to take their first steps into the housing market. The survey lays bare the generational divide in housing with older households continuing to benefit from the growth in home ownership and accumulation of equity in the second half of the 20th century, with younger households suffering from a lack of access to home ownership in the 21st, according to Lucian Cook, head of residential research at Savills. ‘We urgently need a co-ordinated, long term response to the housing crisis rather than short term populist policies that only address a few of the symptoms. A new government will need to front up to the need to provide a bigger, better private rented sector and find ways to encourage the recycling of existing housing wealth so younger households can get on and trade up the housing ladder,’ he said. Savills forecasts that number of private rented households will continue to rise, while levels of owner occupation will continue to slide as higher interest rates, greater mortgage regulation and an acute housing shortage further reduce access to mortgaged home ownership. The firm estimates that by the end of 2019 there will be more… Continue reading
New starter home initiative launched in the UK
A new website has been launched in the UK for first time buyers where they can register in buying a new starter home under a new government initiative. The starter-home.co.uk website comes as new rules have cut planning requirements for the new starter homes, allowing house builders to slash 20% off the usual price and building on the first properties is expected to start within months. It is the latest major push from the government to boost home ownerships and build more homes and it is claimed that there is the potential for discounts of around £100,000 per house. With average house prices for first time buyers in England standing at around £218,000, a new starter home could save young first time buyers across the country an average of £43,000 while helping to get them onto the housing ladder. The plans will allow young first time buyers the opportunity to secure a new starter home at a 20% discount to the market price and thanks to changes in planning policy, builders that develop commercial and industrial land that is either unusable or surplus for the new starter homes will be able to save on costs by freeing them from the requirement to provide affordable housing. In return, developers will have to offer the homes at a minimum 20% discount on the market price to first time buyers who must be aged under 40. Leading home builders and councils have already have said they would consider bringing forward land to develop the new homes from this year, and from today will be able to start submitting their plans to get work started and pass the savings onto home buyers as soon as possible. As well as reducing the prices of properties for young buyers, a design panel, including world class architects Sir Terry Farrell and Sir Quinlan Terry have drawn on housing designs from across the country for home builders to consider for starter homes developments. Aimed at making sure the new homes are attractive properties that can meet the demands of modern life, the panel’s draft report highlights at a range of exemplar new build styles, which in time it is hoped will become the default approach for starter home developments. They aim to be well proportioned homes, homes that fit in with existing local housing styles, and homes that get the details right with good parking and community spaces. ‘A 20% discount off the price could be a real game-changer for many aspiring home owners. My message is clear: we are on your side and we will help you fulfil your dream of buying your first home,’ said Prime Minister David Cameron. Communities Secretary Eric Pickles said that the number of first time buyers is already at a seven year high and these starter homes will help even more people realise their dream of home ownership. Sir Terry Farrell, founding partner at Farrells, said he believes that the templates developed by the government’s Housing… Continue reading
Lending for home in Wales up 9% in 2014, latest data shows
House purchase lending in Wales increased by 9% last year with a consistent performance throughout 2014, according to the latest data from the Council of Mortgage Landers. First time buyers in Wales borrowed £330 million in the fourth quarter, unchanged compared to the third quarter in value but up 3% in number of loans. Compared to the fourth quarter of 2013, total number of loans was unchanged but the amount borrowed increased by 3%. The number of home movers loans declined quarter on quarter to 3,700, valued at £500 million, which was down 3% in volume and down 2% in value compared to the third quarter. Compared to the fourth quarter of 2013, there was a decrease of 8% in volume and down 2% in value. Remortgage lending increased quarter on quarter in the fourth quarter to 3,200 loans worth £330 million, up 3% in volume but unchanged in value on the third quarter. Compared to the fourth quarter of 2013, activity was down 16% in volume and 13% in value. In 2014 as a whole Wales accounted for 2.8% of the UK wide house purchase activity, down from 2.9% in 2013, the CML data also shows. First time buyer affordability changed slightly in Wales quarter on quarter with first time buyers typically borrowing 3.19 times their gross income, less than the 3.23 income multiple in the third quarter and less than the UK average of 3.38. The typical loan size for first time buyers was £100,625 in the fourth quarter, down from £100,800 in the previous quarter. The typical gross income of a first-time buyer household was £31,930 compared to £31,868 in the third quarter. The relatively low level of interest rates saw first time buyers' payment burden remaining relatively low in the third quarter at 17.9% of gross income being spent to cover capital and interest payments, higher the third quarter's 18.2%. Home mover affordability changed fractionally, with home movers typically borrowing 2.76 times their gross income compared 2.79 in the third quarter and to 3.03 for the UK overall. The typical loan size for home movers was £123,356 in fourth quarter, up from £121,928 in the previous quarter. The typical gross household income of a home mover was £45,310 in fourth quarter compared to £46,032 in the third quarter. Home movers' payment burden remained relatively low in Wales at 17.2% of gross income being spent to cover monthly capital and interest payments, less than the 17.5% in the third quarter and considerably less than the 18.4% UK average. ‘The Welsh market performed consistently over the last three quarters, with roughly the same number of borrowers each quarter taking out loans to buy a home. Improving wider economic conditions, aided by government schemes like Help to Buy, saw the strongest annual house purchase figures in Wales since 2007,’ said Peter Hughes, chair of CML Cymru. ‘Unlike the UK overall, Wales has also seen remortgage loans increase this quarter. This growth across the different lending… Continue reading
