Is the UK moving from property ownership towards property rental?
Historically the UK property market has been dominated by home owner properties as opposed to rented properties which have often been the mainstay of markets such as the US. Ironically as the US market moves from a rental to an ownership market it seems as if the UK is moving in the opposite direction. Is this a fair reflection of the UK property market in the longer term or is this just a short-term blip?
The subject of property affordability is something which has been in the news in the UK for some time now and despite the concerns of MPs and influential bodies, the problem seems to be getting worse.
Employment mobility
One subject which is mentioned time and time again with regards to regional property markets is employment mobility and the fact that many people are willing and able to move at very short notice to employment opportunities at the other end of the country. This means that a growing number of individuals, couples and families are choosing to rent properties on a short to medium term basis rather than commit financially to the longer term.
Quote from PropertyForum.com : “Over the last 12 months there has been a significant increase in the cost of property across the UK and many people believe we are headed towards a house price bubble.”
Even though the UK economy is starting to pick up, the subject of employment mobility is one which occurs in both difficult as well as prosperous economic times. Therefore, as this phenomenon is almost certain to continue we can expect further interest in renting properties.
Affordability
It is common knowledge that many first-time buyers have been priced out of property sectors in many parts of the UK. While the UK government has brought in the Help To Buy scheme this is only likely to be a short-term fix and indeed in the medium to longer term it could make the situation even less attractive for first-time buyers. A report today also suggests that UK wages in real terms have hit a historic low which reflects the ever increasing cost of living against minimal wage increases. The longer this continues the larger the gap between what first-time buyers can afford and the price of starter properties in the UK.
Renting is fuelling property price rises
In a rather unfortunate phenomenon, the fact that fewer people are able to afford to buy properties is leading to an increased interest in renting which is in itself pushing property prices higher as landlords look to increase their property portfolios. This in turn means that more people are unable to afford their first property, pushing a larger number towards renting and the vicious circle continues!
In reality there is very little that the UK government can do aside from increasing the number of new property builds on an annual basis although in reality they are already tens of thousands if not hundreds of thousands of properties behind the curve. It seems almost inevitable that the ever increasing rush to rent property, for a variety of reasons, is going to make this situation even worse and many young couples in the future will have little or no chance of owning their own property outright.