In the 1980s most people owned their home and this sector was rising, others rented from a local authority or other social rented housing provider and the private rented sector was relatively small. We expected to continue to be a nation of home owners in the 21st century. Today things are a bit different. The proportion of private rented households nearly doubled between 2003 and 2015. The Resolution Foundation, an independent policy think-tank organisation, has published a research analysis of government data showing that home ownership in England peaked in 2003 at 71% of the population and has now dropped to just under 64% (graphs in the news reports below). In England house prices for first-time buyers have risen from an average of just under £30,000 in the 1980s to more than £150,000 over that period.
In the NE of England the proportion who own their house has fallen from 64% in April 2003 to 56.5% now – according to the Evening Chronicle this is “the lowest figure in Britain apart from Inner London”. Greater Manchester has experienced the greatest drop – 14 percentage points from its peak in the early 2000s with fewer than six in ten households owning their own home.
For many people home ownership is an unrealistic dream and there isn’t a good supply of public rented homes. In Greater Manchester the proportion renting privately came close to tripling between 2003 and 2015. Unlike European countries with a significant rented sector we don’t have rent controls. Private rents have been rising and are eating up an increasing share of people’s earnings. This not only affects living standards of the renters but the economy as whole as people’s disposable incomes are reduced (i.e. people have less to spend on other goods and services).
“Real average working age household income has grown by £32 a week (7 per cent) between 2002-03 and 2015, while real housing costs have grown by £21 a week (32 per cent). As a result, two thirds (66 per cent) of the income gains over the period have been absorbed by rising housing costs.”
“Real average private renter household income has grown by £8 a week (2 per cent) over the period while real housing costs have grown by £19 a week (16 per cent). This means that the income gains made by this group have been absorbed by rising housing costs more than twice over.” http://www.resolutionfoundation.org/publications/the-housing-headwind-the-impact-of-rising-housing-costs-on-uk-living-standards/
Former leader of Newcastle City Council, Labour peer Lord Jeremy Beecham, told the Evening Chronicle “…the figures revealed the Government’s housing policy was a shambles because it left too few affordable homes to rent or buy, adding that providing more social housing was crucial to deal with the problem”. In Scotland the government has ended the ‘right to buy’ which has contributed to the decreasing social housing stock, but some would say that’s ‘too little, too late’.
- BBC News story (2nd August 2016) http://www.bbc.co.uk/news/business-36943134
- Newcastle Evening Chronicle (2nd August 2016) http://www.chroniclelive.co.uk/news/property-news/housing-crisis-sees-north-east-11693823
- How can I get on the property ladder? (2nd August 2016) http://www.chroniclelive.co.uk/news/property-news/housing-crisis-how-can-property-11695963
- Resolution Foundation housing page http://www.resolutionfoundation.org/theme/housing/
- Home ownership struggle reaches Coronation Street (2nd August 2016) http://www.resolutionfoundation.org/media/blog/home-ownership-struggle-reaches-coronation-street/