From 1st July the Council of Mortgage Lenders is integrated into a new trade association, UK Finance. For the time being, all UKF mortgage information will continue to be published on this website, and UKF member-only mortgage information will only be available here.

UK Finance represents around 300 firms in the UK providing credit, banking, markets and payment-related services. The new organisation takes on most of the activities previously carried out by the Asset Based Finance Association, the British Bankers’ Association, the Council of Mortgage Lenders, Financial Fraud Action UK, Payments UK and the UK Cards Association. Please go to www.ukfinance.org.uk for wider content and updates from UK Finance.

  1. Home
  2. News
  3. News & Views
  4. Reports confirm home-ownership remains the tenure of choice

Reports confirm home-ownership remains the tenure of choice

News

Published: 14 June 2012 | Author: Bernard Clarke

Coinciding with unseasonably high levels of rainfall, the last week has seen a deluge of research reports on trends in housing tenure. No fewer than four reports have been published since Friday, including the latest in our own long-running series reporting on aspirations to home-ownership in the short- and long-term.

Our latest research, based on more than 2,000 interviews undertaken by YouGov, is the most recent in a series going back to 1975. It found that 81% of adults hope to be home-owners in 10 years’ time, and 74% aspire to owner-occupation within two years. Owner-occupation therefore remains firmly entrenched, although it has fallen back a little in recent years.

Chart One: Preference for home-ownership in two and ten years' time, by age group, % of respondents

Source: YouGov 2012

Chart One shows that overall levels of owner-occupation, and aspirations to it, are both lower in those aged under 35 than in older people. However, it is in home-ownership aspirations in the short term (within two years) that our survey found the biggest differences between those aged under and over 35. The proportion of those aged under 35 aspiring to be home-owners in the long term (within 10 years) is broadly similar to older age groups.

Another major difference between the age groups is in current levels of home-ownership, which are significantly lower than aspirations in those aged under 35.

What remains unclear is whether and how people will achieve their home-ownership goals. Most of those who are renting privately or sharing with family or friends are under 35, and more than half of these (54%) would like to become home-owners in two years’ time. However, only a third of those who hope to become home-owners within two years actually expect this to happen, indicating perhaps that many of those aspiring to owner-occupation do at least have a realistic understanding of the difficulties they face in achieving their goal in current market conditions.

A report published on the same day by the Joseph Rowntree Foundation (JRF), Housing Options and Solutions for Young People in 2020, also highlighted the challenges faced by young people hoping to become home-owners. It predicted that an extra 1.5 million of those aged between 18 and 30 will be renting privately in eight years’ time.

The JRF report also forecast that an extra half-million young people will live with their parents until into their 30s, taking the total number of young people living with their mother and/or father to 3.7 million by 2020. By the same date, it predicted, the number of home-owners aged under 30 will nearly halve to 1.3 million.

The challenges for young, aspiring home-owners were also a key theme of research published by Halifax a day earlier. It found that more than half of those aged 20-45 believed Britain should remain a nation of home-owners, with 78% agreeing that owner-occupation was a good financial investment. However, it also found that:

  • a quarter (25%) did not want to own a home (an increase of two percentage points on a year ago);
  • two in five (40%) wanted to buy a home but did not believe they would be able to do so;
  • fewer than one-third (31%) had a “serious intention” to buy in the next five years; and
  • half believed that Britain would become a nation of renters within a generation.

With first-time buyer deposits currently averaging 20% of the property price, the Halifax research also contained some interesting findings on attitudes to saving, both by young people and their parents, and on amounts of savings actually acquired by young adults. Among those aged 20-45, it said that:

  • average savings totalled £9.400;
  • men’s savings were worth twice as much as women’s (£12,500, compared to £6,400); and
  • more than a quarter (26%) had savings of less than £3,000, and 35% had no savings at all.

Among the 20-45 age group, 80% accepted that they spent money they could otherwise be saving for a deposit. More than one-third (34%) spent this money on eating out, followed by clothing (32%) and holidays (31%).

Nearly a quarter (23%) were relying on money borrowed from family or friends to help with a deposit, compared to 11% of their parents’ generation. However, only 8% of parents believed that younger adults should be borrowing for this purpose. Almost eight in 10 (79%) believed that younger people should go on fewer or cheaper holidays, with 77% saying they should cut down on going out to save for a deposit.

Finally, a report published by Shelter and Resolution Foundation at the end of last week predicted that the strength of economic recovery would be crucial in determining future tenure patterns. 

If the economy did not show significant signs of recovery, it predicted that mortgaged home-ownership could fall from 31% today to 27% by 2025. With a "cautious" economic recovery, however, mortgaged home-ownership could also recover. 

Looking back on tenure patterns, the report said there had been significant changes within the owner-occupied sector. Between 1993/4 and 2009/10, the proportion of homes owned outright had increased from 25% to 34%. Over the same period, mortgaged home-ownership had declined from 43% to 35%.