Just under 100 years ago, in 1914, the proportion of owner-occupiers in the UK compared to other forms of tenure was just 10%. Today, it is 70%, the balance being made up by private rented (10%) and council \/ housing association (20%) property.<\/p>\n
The mortgage market, which accounts for 39% of ALL properties, is therefore highly important to the health of the housing market. Currently, the mortgage market is constrained by:<\/p>\n
As a result monthly mortgage approvals are running at just 50,000 per month compared to 100,000 per month in the decade up to 2007. Activity is self-evidently down however prices are not decreasing significantly because monthly mortgage repayments are still affordable.<\/p>\n
What is affecting activity is the size of deposit required by all lenders. Where deposits are small (less than 30% of value), interest rates are high but where borrowers can provide a large deposit (30% of value or more), interest rates are low and still affordable. With ongoing problems in the financial markets, we do not expect this new paradigm to change for the foreseeable future.<\/p>\n
What does this mean for the housing market?<\/strong><\/p>\n We expect a fundamental shift in attitude amongst potential house-buyers. Potential buyers will have to make a choice between saving for a deposit in order to buy their first house or foregoing home-ownership altogether. We believe that both of these trends will lead to a growing rented sector.<\/p>\n With the government under financial pressure of its own, we expect that the private sector will respond by increasing supply over the medium term.<\/p>\n Is this outlook bad for the economy?<\/strong><\/p>\n Not necessarily if one looks at other prosperous European countries. In Germany, the owner-occupied sector accounts for just 45% of homes and, in France, it is 57% (UK = 70%) so this demonstrates that a larger rented sector is not necessarily a bad thing in itself.<\/p>\n One thing is certain; unless UK mortgage availability changes, we anticipate a change in the UK\u2019s housing tenure mix over the coming years.<\/p>\n","protected":false},"excerpt":{"rendered":" Just under 100 years ago, in 1914, the proportion of owner-occupiers in the UK compared to other forms of tenure was just 10%. Today, it is 70%, the balance being made up by private rented (10%) and council \/ housing association (20%) property. The mortgage market, which accounts for 39% of ALL properties, is therefore … <\/p>\n