Home Buying has Peaked.

bernard_shaw

http://www.guardian.co.uk/money/2010/jan/09/home-buying-rented-property

Britain has been in thrall to the idea of home ownership for half a century. But levels peaked four years ago at 71% of households, and according to a report this week, long-term private renting is set to make a comeback among young adults. It also predicts that many homeowners will cash in on the equity in their homes and rent more cheaply instead.

The survey, by unbiased.co.uk, the body that represents Britain's independent financial advisers, found that in 2010 as many as 2 million homeowners might sell their homes and rent instead – creating a new generation of "sell to renters".

Full report from Glasgow-based unbiased.co.uk here:
http://www.unbiased.co.uk/find-a-mortgage-adviser/media/press-releases/-/page/uk-homeowners-adopting-european-rental-habits/

Karen Barrett, Chief Executive of Unbiased.co.uk comments, “While there are mixed messages as to whether house prices are now starting to rise again, it is clear that the property market crash has had a profound effect on the way people view their homes. For many who own their own home, the worry and stress of this through the property market volatility has caused them to re-think about whether long-term renting is a viable option for them.
“It has also caused renters to think about their long-term options, and while some still want to get on the property ladder despite the recent crash, many have now decided that the British status symbol of owning your own home no longer has the same importance."

Interesting. Those who massage their status anxiety with their mortgage statements might want to think again. Fashions change. What will the next status symbol be?

julieq

So who is going to buy all of these houses so that other people can rent them back?

It's a tired old argument really, but you have to do pretty well to pay less over a lifetime on rent than the costs of servicing a mortgage on a house, and you have to figure out how to maintain that income into requirement, which adds costs now as it requires significant saving and investment.

The historical norm is a relatively small number of freehold property owners with others renting or buying leases (for security of tenure and cost control). That's where we're heading, it might not be what you expect.

By all means hope for a utopia where there's cheap rented accomodation for all, but there's no great logic to the position. OK, if you have equity, it's easy enough to use that to pay some of the costs, but those who have always rented don't. So how do they fund a lifetime of renting?

Radiantsoul

julieq wrote: »

So who is going to buy all of these houses so that other people can rent them back?

It's a tired old argument really, but you have to do pretty well to pay less over a lifetime on rent than the costs of servicing a mortgage on a house, and you have to figure out how to maintain that income into requirement, which adds costs now as it requires significant saving and investment.

The historical norm is a relatively small number of freehold property owners with others renting or buying leases (for security of tenure and cost control). That's where we're heading, it might not be what you expect.

By all means hope for a utopia where there's cheap rented accomodation for all, but there's no great logic to the position. OK, if you have equity, it's easy enough to use that to pay some of the costs, but those who have always rented don't. So how do they fund a lifetime of renting?

I wonder if social factor might cause homeownership to decline. Home ownership tends to work better for those who are settled in one geographical area. But there is much less security of job tenure and people seem to move around a lot more.

treliac

julieq wrote: »

OK, if you have equity, it's easy enough to use that to pay some of the costs, but those who have always rented don't. So how do they fund a lifetime of renting?

If you don't have a good level of equity/capital at retirement, it's better to have next to/nothing. Benefits will keep the latter in their rented homes.

[Deleted User]

What will the next status symbol be?

Perhaps being a rich landlord cashing in on all those people desparate to rent homes in a country where demand outstrips supply?

Emy1501

Deleted_User wrote: »

Perhaps being a rich landlord cashing in on all those people desparate to rent homes in a country where demand outstrips supply?

And how are people going to pay the rent if they can't afford the interest on a mortgage? And please do not put forward this nonsense that we will see multi earners in property as you cant really have more that 2 wage earners in the average 1 bed/2 bed or 3 bed property especially in view of the fact that most people do want children at sometime in their life.

[Deleted User]

treliac wrote: »

If you don't have a good level of equity/capital at retirement, it's better to have next to/nothing. Benefits will keep the latter in their rented homes.

With increasing numbers of pensioners and decreasing numbers of tax payers I very much doubt that! Pensiners nowadays are struggling desparately if they don't have property, savings and private pensions. IF benefits would keep you in rented accomodation can you imagine the form that accomodation might take? Certainly not anything you'd want to live in!

I would feel VERY nervous about approaching retirement without a pension, savings AND the safety cushion that owning a home provides.

bernard_shaw

julieq wrote: »

So who is going to buy all of these houses so that other people can rent them back?

Institutions.

julieq wrote: »

The historical norm is a relatively small number of freehold property owners with others renting or buying leases (for security of tenure and cost control). That's where we're heading, it might not be what you expect.

I haven't said what I expect. What do you think I expect?

julieq wrote: »

By all means hope for a utopia where there's cheap rented accomodation for all, but there's no great logic to the position. OK, if you have equity, it's easy enough to use that to pay some of the costs, but those who have always rented don't. So how do they fund a lifetime of renting?

I don't know. How do they do it in other countries where housing is recognised as the merit good (or common good) which it is, rather than the Geffen good (or even Veblen good) which we think it is on this island?

The press-release from unbiased.co.uk and it's reporting in the press highlights an interesting potential tipping point in attitudes. There's a lot of it about.

treliac

Deleted_User wrote: »

I would feel VERY nervous about approaching retirement without a pension, savings AND the safety cushion that owning a home provides.

Unfortunately, there are and will be far too many in precisely that position for the govt to overlook them. We really don't need to be frightening older people.

There's no way this country is going to allow pensioners to become homeless. And euthanasia is not on the horizon either. :rolleyes:

[Deleted User]

Emy1501 wrote: »

And how are people going to pay the rent if they can't afford the interest on a mortgage?

Well done Sherlock....it seems you might have spotted a flaw in the logic of the article posted by the OP.

If they can't afford to buy then how can they afford to rent? I can't see rental being subsidised when the country is in so much debt - especially if large numbers of people are likely to sell their houses to take advantage of cheap rent.

[Deleted User]

treliac wrote: »

Unfortunately, there are and will be far too many in precisely that position for the govt to overlook them. We really don't need to be frightening older people.

There's no way this country is going to allow pensioners to become homeless. And euthanasia is not on the horizon either. :rolleyes:

They're being overlooked now! I would consider life on a state pension to be acceptable - even if it did stay at today's levels.

And assuming it does stay at today's levels who pays for it? That's an even bigger burden for future generations - on top of the massive debts that they already have to a pay off. One might argue that anyone that is in a position to secure their own home, pension and savings is duty bound to do so. Then maybe those that genuinely can't will have a hope of a half-decent old age.