Why Home Ownership Falling Is No Surprise To Me

Why Home Ownership Falling Is No Surprise To Me

Home ownership falling is major news at the moment.

But, it comes as no surprise to me whatsoever.

Living in Manchester most of my life I have seen houses that were once sold for £25,000 – £30,000, now going for £250,000 – £300,000 plus.

Manchester has seen the sharpest fall of home ownership of any of the major cities, and I too will have to look further afield when I have the deposit to be able to buy.

The proportion of home owners dropped from 72% in April 2003 to 58% this year in Greater Manchester

I am left with the choice of taking on a mortgage so big it’ll take me thirty five years to pay it off – taking me to age 70.

Or, I can move eight miles down the road, buy a house for less than a third of the price I can here and pay it off in fifteen years.

The cost of buying a house really has got beyond the joke where I live.

I don’t want to leave my beloved city, however, I also do not want over a quarter millions worth of debt hanging around my neck as I approach middle age either.

And let’s face it, this is nothing in comparison to London!

Home ownership falling is major news at the moment. But, it comes as no surprise to me whatsoever. Living in Manchester most of my life I have seen houses that were once sold for £25,000 - £30,000, now going for £250,000 - £300,000 plus. Manchester has seen the sharpest fall of home ownership of any of the major cities, and I too will have to look further afield when I have the deposit to be able to buy. The proportion of home owners dropped from 72% in April 2003 to 58% this year in Greater Manchester I am left with the choice of taking on a mortgage so big it'll take me thirty five years to pay it off - taking me to age 70. Or, I can move eight miles down the road, buy a house for less than a third of the price I can here and pay it off in fifteen years. The cost of buying a house really has got beyond the joke where I live. I don't want to leave my beloved city, however, I also do not want over a quarter millions worth of debt hanging around my neck as I approach middle age either. And let's face it, this is nothing in comparison to London!

Is the gap between income and house prices too big?

Since the housing peak in the early 2000’s, wages have failed to rise at the same price as property, no doubt about it.

However, the reality is it’s not that property has risen too much, it’s more to do with less credit being available for first-time buyers.

Back when it was boom time in the UK the banks were dishing out credit like it was going out of fashion.

Not only that, they were giving people mortgages way out of their income bracket, knowing that if interest rates were to rise they would never be able to afford to pay the mortgage.

It was a total nightmare for many in this country, and I for one don’t want to see a repeat.

So more affordable housing needs to be built.

There are plenty of schemes to help first-time buyers get on the property ladder (with this government anyway), but it doesn’t stop us having to take on far too much debt to buy one.

A former university student could be anything upwards of £300,000 in debt with mortgages and student loans mid-twenties.

Surely there has got to be another way?

Optimism on home ownership still high among 18 – 24 year olds

A recent study on 18 – 24 year olds conducted by icount Money revealed that  61.5% of those surveyed thought they would buy their first home between ages 20 – 30.

I love their optimism, but hardly share it if nothing is done soon to start tackling the problem.

Unless wages suddenly shoot up drastically (yeah right), they may as well add another ten years to their current projection, or make sure they are saving hard for a deposit the moment they enter employment.

At least home ownership is important to today’s youth and they have the aspiration to own their own home some day.

It’s time somebody gave them a reason to keep that optimism.

Final word

My personal opinion is we simply haven’t built enough houses for a growing population, others would argue buy-to-let landlords are snapping up too many of them.

Being a free market capitalist myself, I wouldn’t agree with a ban on buy-to-let.

If you have been smart enough to invest your money wisely to earn a passive income, good for you!

You shouldn’t be penalised for being clever with your cash.

On every new housing estate built there is a quota of affordable housing made available. The problem is, although they are cheaper in price, the deposits are astronomical. My friend needed a £30,000 deposit to buy hers where we live.

Hardly affordable to those who can’t borrow that sort of money from family I’m sure you’ll agree.

So it’s time the government attempted to tackle the problem. But, if so, future governments – regardless of party colours – should also be bound to it to keep the momentum flowing.

The problem isn’t going away and a nation of people living in social housing isn’t the answer.

Over to you West Minister.

 

Have you been priced out of buying in your home town or local area?

Check out the BBC’s calculator to see the areas of the UK you can afford to buy. I’m down to 39% of the country, how did you get on?

 

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Thinking Thrifty

David Jack Taylor is the founder and editor of the Thinking Thrifty blog. After a striking realisation about the direction his life was heading he set himself a 15 year plan to achieve total financial freedom. Join the journey!

He is also a contributor to Clear Debt, ICOUNT Money and M1 Debt Advice blogs discussing all things personal finance.
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2 thoughts on “Why Home Ownership Falling Is No Surprise To Me

  1. It’s a crazy situation, absolutely. Of course it is difficult for the young, but I know many people in their 40s and 50s who rent; many come out of house ownership through relationship breakdown, ill health, loss of income – and debt problems. I dread to think what it will be like for them in the future with high rent and a pension. The govt’s scheme for the young was absurd, as it mainly benefited young high income earners. We need new thinking and ideas – why always the traditional brick and mortar build? Many countries are increasingly using prefab houses that only cost about £40,000 to buy (plus land purchase and cost of putting it up), much improved on the post-war prefabs. I could go on, there is so much in the way of controversy!

    1. Hi Jen thanks for taking the time to read and comment. I agree in the sense that we should be building more affordable homes, but I don’t think the Help-to-Buy scheme has been aimed at high income earners. I wouldn’t put myself in the higher income bracket and I have managed to save a decent amount away purely because of the 25% bonus added on. I think an extra quarter added to your pot is all the motivation you need. I’m not sure what else they could have done?

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