People most likely to own their own home now are 65-74 years old.
The recent release of official data shows owner occupation on the decline and the younger generation struggling to own their own property – no shockers there then to anyone in South London with half an eye on the property market!
What’s interesting to me however is that half of the owner occupiers own their property outright.
Given that only around 50% of society now owns their own home and taking into account the level of property prices, it stand to reason that the 7.4 million that have no mortgage will all have bought their houses many years ago when they were much cheaper. This is backed up by the statistics from the Office of National Statistics that indicate the group of people most likely to own their own home now are 65-74 years old.
The last big push of first time buyers was in 1986 when 600,00 young people climbed onto the property ladder.
Since the start of the millennium, when buy to let mortgages were also starting to become freely available, the numbers of FTB’s have dropped, falling to 200,000 between 2008-2010. The generation (including myself in this band here!) that wisely bought in the early 90’s is now seeing the benefits as the house prices have risen extraordinarily since then, despite a fall for 7 years during this time.
On average the prices have risen 6.9% a year since 1980, the biggest rise in any one year was 25.6% in 1988 and the biggest drop was 7.6% in 2009. I think we are the last generation to profit almost effortlessly from property – until we all start passing it on to our children, when they will then get the benefit…? It’s a nice theory, but with our society ageing and the increase of dementia, we’ll all be spending it on care homes I suspect – either for ourselves or our ageing parents…! We are all living longer, it’s not unheard of now for two generations to be needing care at the same time.
Assuming we haven’t all had to spend it on old age care (or spent it on private education in London, when the kids don’t get the schools they hoped for) and our children do benefit at all after paying the inheritance tax, it will be after they really need a roof over their heads. They will then be passed the age we are now, and a solution to their housing needs will already be in place in whatever form. So maybe a generation of “silver” landlords will be created when they invest it themselves. All this misses out the younger adults in society right now altogether from the property market – either as owner occupiers or investors.
In 2012 only 65% of 35-44 year olds owned their own home, compared to 80% in 1991, and only 45% of 25-34 year olds compared to 65% in 1991. Three years on now and the figures will have decreased further.
It’s easy to see why Labour are targeting this large group of disillusioned “generation renters” in the run up to the election with their manifesto of rent controls and reforms. The younger vote has always been difficult to capture in times of apathy and they are now giving them a common cause to unite under. I would urge anyone in property to read up on the issues that will affect them before voting this year. One only has to look at Scotland to see that reportedly since new regulations came in and tenant fees were banned that rents have actually gone up and some business gone under.
In conclusion it’s obvious more property is needed to serve this new generation of renters and new decent spec skyscrapers are being put up all over London – with the East End and Croydon being most notable my myself recently and Elephant & Castle following suit with ambitious plans. In 2013-14 48% of 25-38 year old households rented their home from a private landlord, and this is steadily climbing. 19% of the total households were renting privately in this period, overtaking the social housing sector at 17%. Property is still a good place to invest, and there will be plenty more on the market if you favour new build properties, and have the stomach for a long term investment and lots of red tape!