I was chatting to a friend over a cup of coffee recently when he asked me who I thought was to blame for the housing crisis.
You see, we Brits have a reputation for being a country of home owners. But the truth of the matter appears to tell a different story, because in a league of the top 46 economic nations of the world, where owning one’s own property is permissible, it may surprise you to learn that the UK is ranked at only No.37 !
At the end of the First World War, 77% of people rented their home. Of these the majority were renting from a private landlord as Council Housing was very much in its infancy. Home ownership rose very slowly during the 1920’s but then started to grow faster as the economy grew following the great depression. After the Luftwaffe had flattened large areas of housing in the early 40’s, the priority after the war had ended was to get people into good quality accommodation. And so it was that local authorities, (i.e. Councils) built large council estates all over the country throughout the 1950’s and 1960’s.
As the economy got back on it’s feet and wages started to rise, people decided they wanted to own their own home instead of renting. During the post war decades, it also became easier to secure a mortgage.
By 1977 over 60% of 30 to 34 year olds were owner occupiers with a mortgage compared to just under 9% of the same age group being in private rented accommodation. (the remainder either being in council housing or living with friends or family). Ten years later, in 1987, we saw further growth in home ownership, as by then nearly 70% of 30 to 34 year olds had a mortgage and less than 5% of were renting privately. A decade later and there wasn’t much change as, in 1997, the homeownership figure was just over 68% but private renting had jumped to 12.1% in the same 30 to 34 year old age group.
Move on another ten years to the 2007 figures, and this showed a slight drop in homeownership to 65.8% but renting had continued to increase to 18.7% (once again when looking at the same 30 to 34 year old age group). The latest set of figures for 2014, show that only 47% of 30 to 34 year olds had a mortgage whilst an eye watering 33% of the same age group were renting privately.
When we look at the Colchester figures of home ownership, looking back to 1991, almost 66% of Colchester households were occupied by the home owner, whilst less than 6% of Colchester households were privately rented. The 2011 census revealed that home ownership in Colchester had dropped to just under 59% and private rented had increased to over 23%.
In my opinion much of the recent rise in private renting in Colchester since the turn of the Millennium is not only because property has become so much more expensive, but the fact that there aren’t the council houses available to move into. The majority have been sold off, so folks have to look to the private rented sector.
The selling of council housing in the 1980’s artificially grew home ownership in the 1980’s. Conversely the younger generation have not had the same opportunity to buy their council house during the 1990’s, 2000’s or 2010’s. That is why, unless the council start building council houses in significant numbers, private renting will continue to grow in Colchester.
So if you want blame anyone for the housing crisis, perhaps we should blame the Grocer’s daughter from Grantham.
If you’d like a second opinion on an investment property you are considering or just to have an informal chat about any aspect of the Colchester property market please feel free to call me on 01206 862288 or email: firstname.lastname@example.org
I’m happy to provide free feedback free of any obligation. If you send me the hyperlink to the property from Rightmove or Zoopla I will usually respond within 24 hours. I am also happy to undertake free pre-purchase visits to your short list of potential properties to provide a rental valuation.