English Housing Survey: what do costs mean for homeownership?

19 Jul 2017

The English Housing Survey was released on 13th July and it revealed some interesting findings for the property landscape in the UK.

The survey outlines house prices and affordability, provides an overview of the rental sector and looks at potential for improvements for housing stock in the future. With first time buyer deposits now hitting an average of 20% - and the average asking price for a property tipping £220,000 – the pressure is on to address the issue of housing stock supply.

Key findings from the English Housing Survey include:

  • First time buyer numbers haven’t changed in 10 years but they are down compared to 20 years ago
  • 70% of households that applied for a mortgage had it approved, but many did not apply because they didn’t think their deposit was large enough
  • Three quarters of mortgage households were couples, 25% had no children
  • The private rented sector has the highest proportion of homes with at least one indicator of poor housing (40%) compared to 19% in the social housing sector
  • Private renters spend 35% of their income on housing costs compared to social renters (28%) and those with mortgages (18%)

Interestingly, even though the numbers of first time buyers have decreased in the past 20 years, more of them now have higher incomes and more help with funding and deposits than they did 20 years ago. Two thirds of first time buyers were in the two highest income bands in 2015-16, and they appear to be much older with an average age of 32 – meaning they have longer to save than previous generations.

This could suggest that house prices are being pushed upwards for only the higher earners, supported by a further statistic in the survey that showed the proportion of first time buyers from the social renter sector was just 4% in 2015-16. This is despite 27% (1 million households) of social renters expecting to buy at some point in the future.

Unsurprisingly, affordability was cited as a key barrier in homeownership; 65% of all renters said that this was the main reason for the struggle. There could be a community factor involved here and statistics could translate differently to those in private rentals, who are more likely to become first time buyers sooner than their social renter counterparts.

According to the figures, around 1.5 million adults wanted to buy or rent their own accommodation, but could not afford to do so. This was more common in the social housing sector, who were also more likely to have dependent children or live on smaller incomes.

Ongoing political uncertainty could mean that currency fluctuations and job stability might stall people’s purchasing decisions. According to the Royal Institution of Chartered Surveyors (RICS), the market has been flatlining for a while and new instructions for June fell for the sixteenth month in a row. RICS' research also found that political uncertainty was named by 44% of surveyors as the main reason for the pessimism, nearly double the number who blamed Brexit.

Could this continue? Well, RICS’ research suggests that property values are actually increasing – great news if you are a property investor, but not so good if you are looking to get a foot on the ladder.

If you have any questions relating to how house prices might affect you, contact the Real Estate team at DMH Stallard who will be happy to help.

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