Home Ownership In UK And Ireland Falls by 11% Over Last Decade

The latest research conducted by Swinton Home Insurance shows that home ownership in the UK and Ireland has decreased by 11% over the last ten years.

Although 56% of Brits would like to buy their own home for the sake of security, 20% of those surveyed are of the opinion that it is now more difficult for first-time buyers to get a foot on the property ladder than 20 years ago.

Furthermore, home ownership has decreased globally, with 22 out of 36 developed countries (61%) suffering a decline over the last 10 years. In the UK, the rental rate now is 35% while the home ownership rate is 65%.

It is easy to see why renting is a more attractive choice, especially for young adults, when the average couple earn around £54,000 per annum and a deposit of more than £38,000 would be required to purchase a home.

In addition, research carried out by the Nottingham Building Society found that most young adults in the UK start saving for a deposit at the age of 30, despite the intention to start at 27. This is often due to other more pressing priorities such as saving into a pension fund and has led to 20 to 30 year-olds being dubbed the ‘Generation Rent’.

The current UK rental rate of 35% is predicted to overtake the home ownership rate of 65% by 2039. Switzerland has the highest rental rate at 59%, followed by Germany at 49% and Austria at 45%. By contrast, Romania, Croatia and Slovakia have the highest rates of home ownership, at 97%, 91% and 90% respectively.

Global fall in home ownership

Across the world, many countries have experienced a fall in home ownership over the last 10 years.

Although some countries such as Australia have seen an increase, the housing market there has fallen in the past year. While home ownership increased by 86% over the past 10 years, the current market is seeing the greatest fall in 15 years.

In Canada, Vancouver has seen a sharp fall with prices dropping by one third in 2018. Yet, on the other hand, the housing market in Toronto is doing well, boosted by domestic and international demand for property.

London, until now a safe haven for wealthy foreign investors, is beset by uncertainty over Brexit, which has led to falling prices and many new-build developments standing empty.

In the UK, the home ownership rate in 2008 was 76%. The 11% fall to 65% in the past 10 years has been the greatest decline globally, followed by Denmark and Iceland, which have both suffered a drop of 9%.

Affordability

Affordability, or the lack of it, is an important factor in understanding why the UK has suffered the greatest decline. The Office for National Statistics (ONS) has reported that houses in the UK now cost almost eight times average earnings, which currently stand at around £25,000.

Although you may assume that a higher average salary would translate to a higher rate of home ownership, it doesn’t automatically follow through.

For instance, Switzerland, a country with a high cost of living, has a lower rate of home ownership than countries with a lower cost of living. There the average monthly salary is £4,253, while the home ownership rate is only 43%.

In the UK, the average monthly salary is around £2,083, but home ownership is one-third higher. Why should this be? The answer lies in the cost of living, which demonstrates that there are other important factors which come into play, besides how much you earn.

It’s cheaper to buy than rent in the UK, if you compare home ownership with renting. Brits could make a saving of more than £2,000 per year by buying rather than renting, according to research by Santander Mortgages. The catch is the amount needed for a mortgage deposit.

The average house price in the UK has gradually fallen since August 2018, but started to recover in April 2019 and now stands at £228,903.

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