If you look back to the 1980s there was a massive increase in homeownership across the UK as the Conservative government launched its right to buy policy. In hindsight many believe that the sale of council properties has had a material impact upon the housing issues today and the fact that council housing numbers continue to fall.
A recent survey confirmed that for the first time in a decade there are more properties being rented in London today than being paid for with a mortgage. Does this indicate a material shift in the UK property market and will future generations need to get used to renting?
London is very different to the rest of the UK
First of all it is worth noting that the London property market is not a reflection of the overall UK property market. Time and time again the London property market goes in a very different direction to the general UK market and the cost of housing in this area has mushroomed over the 30 or 40 years. So, while there may be rental issues across London this is not necessarily a reflection of the rest of the UK where house prices are significantly lower.
To say that properties in the Midlands and the North of England are “more affordable” than their southern counterparts is probably factually correct although not as straightforward as many would assume. The affordability factor is calculated using average wages in the area and it is no secret that the wages in London and the South of England bear little or no resemblance to those in the Midlands and the North.
So, while there is most certainly a north-south divide in the UK property market the affordability factor is not as wide as the average house price figures would suggest.
Are first-time buyers a dying breed?
At this moment in time mortgage regulations, property prices and a sluggish UK economy are not helping first-time buyers climb aboard the property ladder. It is likely that first-time buyers will find it tough the some time to come but to say they are dying breed across the UK is certainly an exaggeration. The ever-growing cost of London property is likely to see more and more people looking out with London for their first home purchase which will at some point cause a ripple through the property market and raise prices away from London. This phenomenon has been expected for many years but it will eventually grow in strength.
As we have mentioned on numerous occasions, the UK government of the day has failed in its promise to build significantly more new properties across the country. It is unfair to lay the whole blame at the Conservative government because governments in the recent past are just as guilty of negligence in this area. In order for first-time buyers to be encouraged to climb aboard the property ladder we will need to see a growing economy, stronger wage inflation and a significantly greater number of new builds per annum.
In essence those in London and the South of England may need to get used to renting as opposed to buying property in the foreseeable future. The situation is very different in the Midlands and the North of England although wages and wage inflation tend to be lower than those in London and the South of England. To say that first-time buyers are a dying breed is perhaps a little over the top but the current market does not make it easy for those looking for their first property to climb aboard the ladder.