Struggle to own a home no longer a “London-centric issue”

New research shows that major English cities, such as Manchester, have seen the sharpest decline in home ownership since levels peaked in the early 2000s, and that homes are becoming increasingly unaffordable for aspiring buyers.

New research shows that major English cities, such as Manchester, have seen the sharpest decline in home ownership since levels peaked in the early 2000s, and that homes are becoming increasingly unaffordable for aspiring buyers.

Analysis from The Resolution Foundation reveals that the proportion of home owners in Greater Manchester dropped from 72% in April 2003 to 58% this year.

According to the think tank, the average buyer paid slightly under £30,000 for their first home in the 1980s, while today’s average price is £150,000.

Speaking to the BBC's Today programme, Matthew Whittaker, chief economist from the Resolution Foundation, said:

"What we particularly have seen since 2002-03 is that incomes simply haven't kept pace with house prices, so it's not just that house prices have gone up.

"We had access to lots of relatively easy credit and the position we're in now is that credit has been turned off.

"We have this sense now that house prices have become detached from people's earnings ... and we no longer have the route through 100% mortgages and the like for getting on to the housing ladder."

West Yorkshire, the metropolitan area of the West Midlands and outer London have also recorded double-digit falls.

The Resolution Foundation’s report, which used data from the Office of National Statistics’ Labour Force Survey, follows the government’s recent English Housing Survey.

In the English Housing Survey the total number of buyers was revealed to have fallen by a third in 10 years and that first time buyers are relying more and more on the ‘bank of mum and dad’ to help them get a foot on the housing ladder.

The Resolution Foundation’s report indicates that home ownership in England peaked in 2003 at 71% of the population and is now recorded at just under 64%. But the drop in home ownership is not confined to England alone.

In Northern Ireland homeownership fell from its peak of 73% in 2006 to 63% now. In Scotland the peak came in 2004 at 69% and has fallen to 63% now and in Wales it was 75% at its peak in 2006 and is now at 70%.

Neither is the housing crisis is no longer confined to London, the think tank says.

"London has a well-known and fully blown housing crisis, but the struggle to buy a home is just as big a problem in cities across the North of England," said Stephen Clarke, policy analyst at The Resolution Foundation.

"The chances of owning a home have fallen fastest in Greater Manchester over the last decade, though the Leeds and Sheffield city areas have also experienced sharp drops."

Unsurprisingly, the fall in ownership corresponds with a rise in renting from private landlords.

The Resolution Foundation’s report found that number of private tenants rose from 11% in 2003 to 19% last year. In Greater Manchester the trend was far more extreme, with the proportion of tenants rising from 6% to 20% during the same time.

The report also highlighted that tenants in the private rented sector spend more of their income on housing than their owners, and that short-term tenancies come with a degree of insecurity.

"The shift to renting privately can reduce current living standards and future wealth, with implications for individuals and the state," Mr Clarke said.

"We cannot allow other cities to edge towards the kind of housing crisis that London has been saddled with."

A Department for Communities and Local Government spokesman said that government-backed schemes have helped more than 300,000 people into home-ownership since 2010.

While claiming that a 10-year fall in home ownership had stopped, he acknowledged that there is more to do.

“… we know there is more to do, which is why we have set out the most ambitious vision for housing in a generation, including delivering hundreds of thousands of homes exclusively for first-time buyers.”

 

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