Opinion: As house prices outstrip salaries, why are we still chasing the dream of homeownership?
It’s over. Britain will no longer be a nation of homeowners.
Now property sales are heading for an 80-year low and rentals are surpassing purchases for the first time since 1930, according to Countrywide figures released last week. To top it all off, prices have never been higher.
In the good days (circa 1997 – just 20 years ago), a young London professional would be well on their way to home ownership by their mid-twenties.
Not anymore, now a basic flat is costing nearly ten times a salary. For most young people, that’s all homeownership is now – a dream, followed by lots of tears.
But why do we care so much? Why are we in the UK so obsessed with owning a home of our own?
In many countries people are fairly relaxed about renting. The USA is perhaps the best example, whilst in Europe places like Germany and even that bastion of free market individualism, Switzerland, are among many countries where renting is the norm as opposed to ownership.
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An American friend of mine considers owning a house a liability – he’d rather have long-term rent where all the maintenance and other stuff is taken care of by a landlord. And he has security of tenure – when his rental period is up, he renegotiates, mostly in line with inflation.
The obsession with ownership of private property is, ironically, directly related to successive governments selling off its assets. The introduction of Right to Buy resulted in short-term political gain, but has left us with a long-term deficit in genuinely affordable housing stock.
Right to Buy is being scrapped in Scotland but the horse has bolted. In England, the horse is on a canter and, in London, it has jumped off a cliff.
In 1979, we built 379,000 homes. Of these, about half were in the Public Rented Sector, a nice name for what are known as council houses.
Certainly some were social nightmares but with the help of hindsight, we could do it again and this time we might get it right.
Of course, there is always the burgeoning Private Rented Sector, with build-to-rent developers gaining momentum. Some of these have come from across The Pond with an eye on a gaping hole in the market.
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London is the magnet as it is in desperate need of affordable high quality rented housing for all those bright young things who come to work here.
But this will not only require the political will to let both public and private sectors build new homes; it will also need a cultural change in our national psyche on home ownership.
This, of course, is easier said than done. But if younger generations are to avoid dreaming an increasingly distant dream, it may be something we’re all going to have to get used to.
Is it time, at last, to put the notion that this country will forever be a property-owning democracy to rest?