Research by the Resolution Foundation has shown that the ratio of home-owners to tenants in the United Kingdom has dropped considerably over the last decade or so.
Published on 2nd August 2016, and using data from the Office for National Statistics, the report says that the percentage of home owners in February 2016 averaged 64.1% over the whole of the UK. This compares to 70.9% at its peak in October 2004.
In 2015, the average price paid by a first time buyer topped £150,000 – prices and deposits are also continuing to rise, and in central London buyers paid an average of £330,000. This has resulted in only a third of houses currently being owned in the capital.
Regional variations show that some parts of the country have been worse than others, although all regions show lower homeownership volumes. The range of homeownership levels at their peak is from 78.7% (North West) to 42.6% (Inner London). In February, it ranged from 71.4% (North West) to 36.4% (Inner London).
The peaks were at different periods across the country – the South West and North West peaked in October 1999, whereas Northern Ireland didn’t peak until November 2006, and Wales in May 2006.
Greater Manchester has come off worst with a drop of 14.5% from 72.4% in April 2003, to 57.9% in February this year. This triggered a response from Manchester City Council, urging the Government to “wake-up” and saying that “more must be done by central government to enable us to build the homes Greater Manchester needs now and into the future”.
This sentiment has been echoed by other organisations such as the Northern Housing Consortium and Home Group (Homes for the North). Both say that there is not just a need for more housing, but for more of mixed tenure.
In a recent blog post from a research and policy analyst for the Resolution Foundation, Stephen Clarke comments:
“This matters not just because of the frustration it brings for those unable to buy, but because of its impact on living standards too.
“Longer-term, this new housing reality also means that younger generations face more uncertain retirements, with less wealth to fall back on and potentially spiralling Housing Benefit bills.”
Other regions where ownership has dropped by more than ten per cent are West Yorkshire (10.6%), West Midlands (11.2%), Outer London (13.5%) and Northern Ireland (10.5%).
At the other end, with the smallest falls in ownership levels, are Wales (5.1%), the rest of the South East (5.3%) and Scotland (5.6%) with Strathclyde falling by only 3.4%.
The main reason cited for the decline is the un-affordability of home ownership – saving for a deposit, and getting a large enough mortgage on low wages. About two thirds of tenants would like to be home owners, although a small minority of tenants preferred to rent for the flexibility it gives them.