Heath – More people rent than have a mortgage
Many people think the British obsession with owning your
home started with Thatcher in the early 1980’s, when she allowed council
tenants to but their council houses, under the right to buy scheme. However, the
growth actually started just after the Second World War. Looking at the country
as a whole, in 1951, 30% of residential property were owner occupied, then
every ten years that rose incrementally to 39% by 1961, 51% by 1971, 58% by
1981, 68.07% by 2001 but after that, it dropped to 63.4% by 2011 and continues
to drop today.
After leaving home,early/mid twenties young adults tend to
start to settle down and move out of the family home into their own home. After a couple of years, they will have a
choice of either buying their first house (albeit with mortgage) or decide to privately
rent for the long term (because the Council House waiting list is measured in
decades at the moment!). The ratio of people owning a house with a mortgage
verses privately renting is an extremely important guide to what people are
doing about their housing needs and what their attitude to renting vs buying
is. This is a really important change in the way we live, as I explained to a
local Heath homeowner the other day, knowing when and where the demand of
tenants or buyers is going to come from in the coming decade is just as
important as the knowing the supply side of the buy to let equation, in
relation to number of properties built in the city, Heath property prices and Heath
rents.
In the Heath area as whole, there are 632 households that
are privately rented via a landlord or letting agency verses 2,083 households
that are owned with a mortgage. However, when we look deeper (as the devil is
always in the detail), 1,102 of those 2,083 households (with a mortgage) are 35
to 49 year old’s and 594 are households of 50 to 64 year olds. I would expect most
the 50+ years to be paying their mortgage off as they enter retirement as I
would with some of the people in their mid/late 40’s…people are taking longer
to pay their mortgages off nowadays
Meanwhile, at the other end, in the 25 to 34 age range (the
age most people bought their first home in the 1970’s/80’s/90’s) only 283
of the 614 households occupied by those 25 and 34 year olds are owner occupiers
with mortgages, because 277 households are privately rented by that age group
(the rest being made up of rent free accommodation, living with family, local
authority and housing association).
This means only 46.1% of 25 to 34 years, living in Heath, have bought
their house (with a mortgage). Twenty years ago, that would have a much higher
percentage of homeowners (between 75% to 85%).
It can be seen that as the older generation pay their
mortgages off as they start to get to retirement and the younger generation
aren’t jumping on the property ladder like they were 20 or 30 years ago, the
private rental sector will take up the slack, as more and more people will want
a roof over their head. With Local Authorities and Housing Associations not
building houses in anywhere near the numbers that they were in the 1950’s, 60’
and 70’s, the private landlord appears to have good demand for their rental
properties for many decades to come.
This will create a polarisation in the housing market
between those, mostly older, households who own outright and those, mostly
younger, households who rent. Our housing market is very much turning into a European
model. However, all is not lost, the younger generation will inherit their
parents properties, which in turn will enable them to buy, albeit later in
life.
If you are a landlord or homeowner, and would like to read
more articles like this and other information on the Heath Property Market,
then please visit the Heath Property
Blog :
http://heath-property-blog.blogspot.co.uk/
