Maybe after reading this, the tabloids will understand that actually, high house prices are a bad thing. According to a report published by the Halifax yesterday, the number of owner-occupied households in England saw their biggest fall ever recorded last year, and records go all the way back to 1966.
In fact, the total number of owner-occupied households spread across England’s green and pleasant land dropped by 83,000 to 14.538 million in 2007. It was the second year in succession which saw an annual decline in owner-occupiers.
Looking at a bigger timeframe, between 2001 and 2006 London recorded the largest decline – down 111,000. But, during the same period, the North saw owner-occupancy rates soar by 345,000.
But the bottom line is this: by the end of last year the rate of owner-occupancy stood at 69.8%; the lowest rate since 1998.
Strangely, the year saw a rise in the number of people who owned their home outright – that is to say had repaid their mortgage in full, but this failed to increase sufficiently to offset the fall in the number of those buying a home with a mortgage.
Not surprisingly, while owner-occupancy rates fell, the number of households renting privately rose further – up 107,000 in 2007.
The South of England, and younger would be homeowners, were hit the most during the year.
Apparently, Spain has the highest owner-occupation rate (82 per cent) amongst advanced industrial nations. Over recent times, the rate of owner-occupation has been highest in Hungary (92 per cent), followed by Lithuania (84 per cent).
The UK’s owner-occupancy rate is of a similar level to that seen in the US, Australia, Sweden and Belgium. Both France and Germany have a much lower owner occupancy rate.
This data poses some interesting questions. You may have noticed, the countries with high owner occupancy rates are also the countries that have suffered from high house price inflation in recent years. Furthermore, countries where it is more popular to rent, tend to see much lower average house prices.
That begs some important questions. If owner-occupancy rates are falling in the UK, then clearly it is buy-to-let investors who have been pushing prices up. But remember, in countries where it is more popular to rent, house prices are cheaper.
And finally, and surely the answer to this riddle will determine the ultimate course of house prices, if house prices are too expensive for would-be owner occupiers, how can it be viable for investors to buy those properties and rent them to the very same people who can’t afford to buy them?
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