A new study published by the Department for Communities and Local Government shows that many of England’s residents have been priced out the real estate market and that homeownership is approaching new lows. The new English Survey of Housing shows that homeownership is the lowest it’s been in the last 25 years and that the number of families renting is at its highest since the 1960s. The desire to own a home still remains high, however, even though only 1 in 10 people under the age of 35 owns a home in England. For more on this continue reading the following article from Property Wire.
Home ownership in England has fallen to its lowest level for 25 years as the economic downturn and lack of lending means many cannot afford to buy.
The figures from the annual English Survey of Housing, published by the Department for Communities and Local Government, reveal the growth of the private rented sector which is now at its highest level since the early 1990s.
It means that younger people are being priced out of the market. Indeed the average home cost £50,000 in 1988 and is now £163,000, six times higher than the average salary.
The percentage of households who own their own homes has dropped every year for the last seven years. In the 2011/2012 financial year some 65.3 of households were owner occupiers, down from the peak of 70.9% in 2003.
The figures also show that the number of families who are privately renting their home has risen to its highest level since 1960s to 3.8million, equalling that of the social rented sector.
Average weekly rents in the private rented sector continued to be well above those in the social rented sector at £164 per week compared with £83. While mean rents have increased in both sectors since 2008 to 2009, private rented sector rents showed no significant change from 2010 to 2011.
But home ownership is still regarded as desirable. Nearly 60 % of people who privately rent their home hope to buy their own home at some point in the future.
And only one in 10 home owners are under the age of 35, a sign of younger people are not able to find enough money for the high level of deposits needed for first time buyers.
Of those who own their home without a mortgage, nearly 60% are aged 65 and over, with many benefitting from the house price boom having bought their home decades ago.
According to Simon Rubinsohn, chief economist of the Royal Institution of Chartered Surveyors the figures provide further evidence of the shift away from owner occupation in favour of the rental sector.
‘RICS believe these broad trends are set to persist. Although the Funding for Lending Scheme has raised the availability of finance for first-time buyers, required deposits are still historically high limiting accessibility for many,’ he said.
‘Meanwhile, the scaling back in government grant will continue to impact on the volume of socially rented property on offer. RICS feel the one tenure that is set for further growth is the private rented sector which within a few years could house one in five households,’ he added.
This article was republished with permission from Property Wire.