An interesting piece of news in the Guardian yesterday. Home ownership in England fell last year for the first time since 1953. There are 14.62 million owner occupied homes in 2006, 25,000 fewer than the previous year. There are 8.2 million mortgage holders.
If many people are being ‘priced out of the market’, some people are doing alright; there was a rise of 71,000 in the number of those buying their home outright. Home ownership stands at 70%, below the peak in 2000 when it rose to 71%.
David Stubbs from the University of the Bleedin’ Obvious (actually the Royal Institute of Chartered Surveyors), said that the key issue behind this was affordability. First time buyers are finding it harder to “get on the property ladder”. Since 1997 when the Reverend Blair moved into his new house (and started increasing his personal property portfolio) prices have increased by a staggering 11% a year. The problem has been exacerbated by the fact that “a strong buy-to-let sector is competing with first time buyers for property”.
In another stunning use of deductive powers Mr Stubbs added that the first fall in overall ownership was probably partly driven by rising inequality of income in Britain.
The figures undoudtedly also reflect the pressure that mortgage lenders are under. Mortgages today are based on five or more times the income of the mortgagee. Lenders are not too careful these days about checking the real income of individuals. This is the equivalent of what in the USA are called sub-prime mortgages (in which sector there is a crisis – 13% of borrowers are behind on their payments, and 30 of America’s sub-prime lenders have closed in the last 3 months); that is mortgages that people cannot really afford, and on which there is a good chance of default.
News recently emerged of a mortgage being given to a 102 year old – a 25 year mortgage!
This news probably indicates that home ownership has reached its limit. Moreover it underlines the need for a Council Housing building programme to address the housing crisis, something which the Blair government is ideologically opposed to. Since his government began in 1997 numbers on Council House waiting lists have increased by 1.5 million. However, need is undoubtedly much higher than that because many people will not have bothered to put their name on the list since they stand no chance of ever getting a home.