An entire generation locked out of property ownership

Graham_Devon

Just one in four couples will be able to afford to buy a home in the future, according to a report by the Joseph Rowntree Foundation, which says that Britain is turning into a "rotten borough" where a whole generation will be locked out of the property-owning democracy.

The report, by the JRF Housing Market Task Force, calls for radical reform to Britain's housing and planning system to reduce the boom-and-bust cycle. It wants an urgent increase in the supply of housing, both private and council, plus credit controls, such as temporary caps on the maximum amounts an individual can borrow, to curb future booms.

Council tax should be reformed, so that it reflects a fixed percentage of a property's value, and stamp duty raised regularly in line with inflation, according to the report.


But increasing the supply of new homes is crucial, it argues. If UK house building remains at the current volume of around 150,000 units a year, the report predicts that the proportion of couples aged 30-34 who are able to afford their first home will fall from 56% today to just 28% by 2026.

The report's author, Mark Stephens, Professor in Urban Economics at the University of Glasgow, warned that as home buyers turn to the "bank of mum and dad", home ownership will "increasingly entrench the economic privilege of the children of the better off … for those locked out, the property owning democracy must increasingly represent a rotten borough".

Continued high house prices and the lack of mortgage loans for first-time buyers, has led to a reversal in the trend towards higher levels of home ownership which began in 2007. But Stephens found that although the fall in home ownership is greatest among younger-age cohorts, it is now affecting the 45-64 age group.

"Consequently ownership is being turned into an engine of inequality between generations as the young – and now not-so-young – pay for the wealth generation of older people," he said.

The article follows on on the below link:
http://www.guardian.co.uk/money/blog/2011/may/17/home-ownership-locked-out

Personally feel thats a good report. Not only does it include low supply, but also credit controls etc. It's not all about lack of building, and the report sums it up fairly in my opinion.

It's going to be a difficult one. Those that make the planning rules are often holding multiple properties as a portfolio themselves. Will be difficult to get this one moving.

System

Graham_Devon wrote: »

But increasing the supply of new homes is crucial, it argues. If UK house building remains at the current volume of around 150,000 units a year, the report predicts that the proportion of couples aged 30-34 who are able to afford their first home will fall from 56% today to just 28% by 2026.

Wowzers, if someone works that out, it may be possible that's the most bullish statement ever.

Whats the 28th percentile salary for couples aged 30-34?

Graham_Devon

Joeskeppi wrote: »

Wowzers, if someone works that out, it may be possible that's the most bullish statement ever.

Whats the 28th percentile salary for couples aged 30-34?

To make that into a bullish statement, the statement would have to be along the lines of "f*ck the next generation, I'm ok, I was born earlier, how much lovely jubbly money can I make of the back of this rotten borough"

ukcarper

Graham_Devon wrote: »

To make that into a bullish statement, the statement would have to be along the lines of "f*ck the next generation, I'm ok, I was born earlier, how much lovely jubbly money can I make of the back of this rotten borough"

But surely by saying only 1 in 4 will be able to afford to buy he is saying that house prices will increase whether that is good or not is neither here or nor there.

System

Graham_Devon wrote: »

To make that into a bullish statement, the statement would have to be along the lines of "f*ck the next generation, I'm ok, I was born earlier, how much lovely jubbly money can I make of the back of this rotten borough"

Sorry, I was talking in mature terms. Let's not ruin your own thread in 2 posts.

Graham_Devon

ukcarper wrote: »

But surely by saying only 1 in 4 will be able to afford to buy he is saying that house prices will increase whether that is good or not is neither here or nor there.

The OP is about 74% of a generation being locked out.

2nd post is "wow, how wealthy will I be off the back of this misery".

ukcarper

Graham_Devon wrote: »

The OP is about 74% of a generation being locked out.

2nd post is "wow, how wealthy will I be off the back of this misery".

Nether the less whether you like what they are saying or not the post is bullish or should I say article.

HAMISH_MCTAVISH

So only around 30% will be able to buy according to the Rowntree Foundation......

Now, where have I heard that before.

Oh yes, here:

HAMISH_MCTAVISH wrote: »

as long as we continue to only build 30% of the houses we need, then only the top earning 35% of households need to be able to afford to buy them in order for prices to rise. .

FATBALLZ

HAMISH_MCTAVISH wrote: »

So only around 30% will be able to buy according to the Rowntree Foundation......

Now, where have I heard that before.

Oh yes, here:

I hope they correctly referenced your work in their report.

ninky_2

i blame the parents. (and the grand parents and the great great grandparents). there's no reason for people to be starting from zero in this day and age.

HAMISH_MCTAVISH

FATBALLZ wrote: »

I hope they correctly referenced your work in their report.

They bl00dy well should have, the content is pretty similar to what I've been posting about for years.

Some more excerpts:

HAMISH_MCTAVISH wrote: »

As a rule, most bears assumed that this crash would play out pretty much like the last one, where mortgage funding was relatively freely available throughout, there was certainly no credit crisis that froze FTB's out, and housebuilding kept going pretty much at normal levels, so the market fell for a couple of years and then stagnated for almost a decade.....

Instead, what they got was mortgage rationing, FTB's locked out of the market whilst investors and those with equity aren't, supply falling off a cliff and rapidly rebounding prices, housebuilding numbers at record lows sowing the seeds of the next boom, minimal numbers of forced sales, deposits in savings accounts shrinking in real terms, whilst population keeps growing and rents keep soaring.

An entire generation of FTB's is being squeezed relentlessly by higher mortgage funding costs, higher deposit requirements, higher rents, low returns on savings, and the shortage of housing means they won't be seeing any significant price falls....

Certainly nowhere near enough to level the playing field against the extra lifetime housing costs they are incurring.

This credit crisis and crash hasn't helped FTB's at all.

It's ruining their future.

And the cavalier attitude of the bears on here towards it is absolutely despicable.