Homeownership rates have been dropping since the turn of the century, but the trend has become more and more pronounced over the last couple of years.
The Resolution Foundation has recently published its Living Standards 2016 report. In this report, the think tank has a closer look at the recent decline of homeownership and give an outlook of Britain’s property market.
1. Distribution of tenure
The 20th century has been perfectly split in half when it comes to homeownership. Whilst during the first halt of the century the clear majority of Britons lived in private rented accommodation, the popularity of owning your home picked up from 1950.
2. Homeownership rates by age of household heads
A comparison between ownership rates between 1998-2001 and 2011-2014 shows that on average Millennials are 16% less likely to own their home at the same age.
3. Change in homeownership shares by age
Over-64s now account for almost one-third (32%) of all homeowners, an increase of 9% since 1998.
4. Change in homeownership by income group
The decline in homeownership has been felt the sharpest among those on “low to middle incomes” (LMIs). This group is by the Resolution Foundation as those “on below-average incomes who remain largely independent of state support. More specifically, it covers working-age adults situated between the 10th and 50th percentiles of the working-age household income distribution who receive less than one-fifth of their income from means-tested benefits (excluding tax credits).”
5. Change in tenure among low to middle income households
The last (almost) 20 years show a sharp fall in ownership and at the same time the surge in private renting within the group.
6. Change in tenure among low to middle income households aged under-35
Since 1998, homeownership has dropped by 56%, from 57% down to just 25% of recent. To put this into context, private renting over the same time increased by an impressive 139%, overtaking homeownership fro LMIs in 2008.
7. Change in tenure among low to middle income households aged under-35 in London
Homeownership among LMIs in London has dropped by almost two-thirds since 1997, meaning LMIs in the capital are now more likely to live in social housing than owning their own home.
8. Change in tenure among low to middle income households with children
Homeownership in this group has fallen by almost one-third since 2000, whilst private renting has almost quadrupled over the same period. Although the change might not seem as drastic, it might be worse due to the lack of appropriate rental accommodation for families.
9. Ratios of average first time buyer house prices to average disposable household incomes by income group
On average, a first-time buyer home in 1999 used to cost 3.8 times LMI household income. This is forecast to rise to an average of 6.7% by 2020.
10. Number of years required for low to middle income households to meet typical first-time buyer purchase costs
The affordability rate is particularly low when considering how long it takes LMIs to save up towards the purchase for a typical first-time buyer home: on average it will take an LMI 22 years to save up for their first home.