Not the end of our property love affair, just a temporary tiff
WILL an Englishman’s home ever be a rented castle?
Perhaps one of most interesting debates to come out of the housing slump which has set in over the past few years is the degree to which our fallingout with bricks and mortar is a permanent one.
The average age of the typical first-time buyer moves ever closer to 40, record numbers of people are renting and the supply of new housing is falling way below the levels we are told we need to build.
All in all, it’s a very confusing picture.
One of the defining characteristics of the last property boom was its length – in stark contrast to almost all of its predecessors, the 1997-2007 boom surged on for a decade, and when it began to falter in 2001, the terrible events of 9-11 provided an ironic fillip to the UK housing market. With investors fleeing from volatile stock markets, buy to let investment was born and property was commoditised for the first time – people were able to buy with generous mortgage finance, low deposits and, quite often, at arms’ length.
This 10-year boom effectively cushioned potential property buyers from the ghoul of falling prices in unprecedented fashion and at least some of the 9-11 generation had no sense of what it was to see values falling.
Little surprise, then, that today’s would-be purchasers are a little wary of a market which is recovering from a double boom. Recent research by the National Centre for Social Research for Halifax showed that whilst confidence amongst first-time buyers is certainly low, it is often a sense of perception rather than a reality which holds them back.
The research identified that 40 per cent of non home-owners cannot currently get on the housing ladder which begs the question of the 60 per cent majority – some of these do not wish to get on the ladder, believing that the market will fall further, and some believe that the process of applying for a mortgage is so onerous that they will not take this on and, moreover, that their credit rating will suffer if their mortgage application is declined.
Around 84 per cent of the 8,000 respondents believe that banks do not wish to lend to first-time buyers at all.
Most significantly, and this is the real context for the debate, 59 per cent of the group thought that renting was a waste of money, and a massive 77 per cent want to own their own home in spite of the difficulties.
Hardly the stuff of a confident market, but will these sentiments suddenly change when the market improves? Probably, and very quickly – whilst the average first time buyer may be renting at the moment, is this with the genuine long-term approval of their parents and relatives or is this similarly a short-term view?
Many parents will ultimately provide the deposit to plonk little Johnny on to the first step of the housing ladder and they are more than happy to wait until they are certain that their investment is made in a rising market.
Mortgage finance will unlock and developers and housebuilders won’t be far behindundoubtedly, the industry will have to think long and hard about how the next generation of residential development will look and, for the first time, how we are able to ensure that the private rented sector is able to accommodate higher demand from people who are, perhaps, likely to rent for longer than they would previously have done.
Having been in love with property ownership since the ’50s, it is untenable that the English public will stay out of love for more time than it takes for prices to start to grow again, for the banks to start lending again, and for the world economy to emerge from what has been an extraordinary epoch. Probably not very long at all!