Mortgages are hard to come by and property prices have far outstripped the average wage increase.
However, new research from Halifax, one of the UK’s biggest mortgage lenders, show that not all are forced to live in rented properties –– many actually choose and prefer to rent.
“Although this is not good news for first-time homebuyers in the UK, it’s great news for South African investors who own London properties or who are in a position to break into the UK market. Our clients will be delighted,” said Mike Smuts, managing director of Smuts & Taylor, a South African investment firm based in London this week when asked to comment on the latest research from Halifax.
The report from one of the UK’s biggest mortgage lenders shows that 50 years ago, the average home cost £2 507. A half century on, the average home costs £162 085.
Even when taking into account the so-called housing “crash” of recent years, average house price inflation over the last decade has far outstripped average wage increases.
House prices rose by 273% in real terms between 1959 and 2009 while the growth in real earnings was only 169% over the same period.
This disparity has made it increasingly difficult for first-time buyers to enter the market and the average age of a first-time purchaser buying without assistance is now 38.
Many cheered on the housing slowdown in the belief that it would help them onto the first rung of the housing ladder when in fact, rather than being boosted by falling house prices, first-time buyers’ ability to purchase a home has been seriously undermined during the course of the slowdown.
This is mainly due to the fact that lenders tightened their lending criteria dramatically in the aftershock of the credit crunch.
This has led to a 40% increase in the private rented sector over the last five years while home ownership has slipped back to 68%.
In 1961, 33% of homes were privately rented, but this fell over 30 years to 9%. It has since started to rise again, reaching 14% in 2008.
However, not all are forced to live in rented properties –– many choose and prefer to rent.
In total, Britain has built 13 million houses over the past 50 years, according to Halifax, but the housing supply in the UK has slowed to its lowest level since the Second World War, with only 156 816 houses completed in 2009. –– Mortgages.com