Not the end of our prop­erty love af­fair, just a tem­po­rary tiff

Yorkshire Post - Property - - PROPERTY - Jonathan Mor­gan

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!

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