When you spend as much time having pointless and circular arguments about Britain’s housing crisis as I do, you get used to the fact that some people – normally over 40, normally in posesssion of at least one home, normally (let’s be honest about this) rich – don’t believe we have a housing crisis at all.
Oh no, they’ll say, we have a geographic crisis. We have plenty of houses, they’re just not in the same places as the jobs are. If everyone would just being so fussy about living within commuting distance of their work then everything would probably be fine.
Others will blame immigration, or the governments that allowed it. Others still will argue that, actually, housing is still very affordable, really. Sure, it may now cost you a six times your income to get a small shoe box somewhere on an arterial road these days; but that’s onlybecause interest rates have been so low for so long.
When they bought their first home, at the tender age of 17 or whatever, it may only have cost them tuppence happeny; but they had to deal with interest ratest at 15 per cent, so actually homes are no less affordable now than they were then.
There may be some truth to this: we’ll find out when interest rates go up. But there certainly isn’t much. Consider this graph, which shows how home ownership change over time for different age cohorts.
The graph comes from a research note published by Neal Hudson, a housing market analyst with consultancy Savills; he in turn got the figures form the Council of Mortgage Lenders (CML).
Graph courtesy of Savills’ Neal Hudson, based on figures from the CML.
What you can see is that those born in 1960 and those born in 1970 had nearly identical experiences of home ownership. A majority had bought their fist home by their early 30s; a decade later, most had.
That isn’t true for those born in the eighties. For those born a decade after that, it’s worse again. And it’s going to get worse still. To quote Hudson:
Younger people are finding it increasingly difficulty to buy in a housing market where prices are many multiples of income and mortgage lending at high loan-to-values is limited and expensive…
[The CML’s] work suggests that around 64 per cent of households born in 1960 and 1970 owned their own home by the age of 35. For those born in 1980, the figure falls to 44 per cent. They also project that only 39 per cent of those born in 1990 will own their home by the time they reach 35 years old.
There is at least an outside chance that the fall in home ownership rates among today’s 35 year olds won’t be a persistent problem (no, seriously, let the idea breathe). By their mid twenties they’re a little behind where those born in 1970 were, but only by a little – the gap is not much bigger than the one between the 1970 lot and the 1960 one at the same age. Maybe it is only the madness of the boom, and the years of ultra-low interest rates that followed it, that has caused this collapse in ownership; maybe, once the world returns to how it was, normality will reassert itself. Maybe.
But let’s imagine it doesn’t. Let’s imagine that the 1980 cohort never achieve home ownership in the same numbers as their elders; and ethat ven those who do never manage to pay off their mortgages.
If this does happen (spoiler: it probably will), it will have all sorts of implications for the future. What happens when large numbers of people are forced to raise children in insecure rented accommodation? Or when a significant number of the 1980s generation grow old, and find they have neither pensions nor assets?
Politicians of all parties claim they want a nation of home ownership. It’s a nice amibiton. But since it’s not clear they can create one, they might want to start trying to improve things for those who are never going to own their own homes, too.
