A think tank has warned cities outside of London are now unaffordable for many potential homeowners
The government has continually pushed to get Britain buying. High prices in the south of England have been a significant issue for a while now, but it now appears that many other cities, particularly in the north are also deemed unaffordable.
New research from the Resolution Foundation revealed many major English cities, particularly Manchester, have seen a significant fall in homeownership since early 2000, when figures peaked.
The report drew on figures from the Office for National Statistics’ Labour Force Survey (LFS). Data from the government’s English Housing Survey revealed homebuyers fell by a third in 10 years. Furthermore, those who do buy their first home are relying increasingly on help from their parents to get on the ladder.
Homeownership is for many now a pipedream that will never happen. With house prices climbing higher and higher it is little wonder Generation Rent is becoming a reality across major cities outside the capital.
While the north has always been deemed more affordable than the south it appears this may not be the case. The research found in Greater Manchester, for example, the number of homeowners fell from 72 per cent in April 2013 to 58 per cent this year. Significant falls have also been seen in other areas including West Yorkshire, the metropolitan area of the West Midlands and outer London.
Matthew Whittaker, chief economist from the Resolution Foundation, said: “What we particularly have seen since 2002-03 is that incomes simply haven’t kept pace with house prices, so it’s not just that house prices have gone up.
“We had access to lots of relatively easy credit and the position we’re in now is that credit has been turned off.
“We have this sense now that house prices have become detached from people’s earnings … and we no longer have the route through 100 per cent mortgages and the like for getting on to the housing ladder.”
The think tank found that in the 1980s the average first time payer paid just under £30,000 for their new home. Today, that figure is more than £150,000. The highest rate of homeownership was seen in 2013, when figures peaked at 71 per cent. Now this has fallen to below 64 per cent.
Other UK nations have also seen a decline, with Northern Ireland falling from its peak in 2006 of 73 per cent to 63 per cent now. Scotland dropped from its 2004 peak of 69 per cent to 63, and Wales dropped from it 2006 peak of 75 per cent to 70.
The conclusion from the research was that struggling to buy a home is now no longer an issue that is affecting people living in London. Other major cities are also being priced out of local people’s reach.
Policy analyst Stephen Clarke said: “London has a well-known and fully blown housing crisis, but the struggle to buy a home is just as big a problem in cities across the North of England.
“The chances of owning a home have fallen fastest in Greater Manchester over the last decade, though the Leeds and Sheffield city areas have also experienced sharp drops.”
Unsurprisingly the fall of homeownership has seen a boost in rental figures, with the proportion of private tenants rising from 11 per cent in 2003 to 19 per cent last year. Greater Manchester, an area that has seen homeownership rates fall, has seen a rise from 6 per cent to 20 in the same period.
The report said it recognised homeownership was a national obsession, but said people in the private rented sector spent more income on housing than their owners. Furthermore, renters have less security.
Clarke said: “The shift to renting privately can reduce current living standards and future wealth, with implications for individuals and the state.
“We cannot allow other cities to edge towards the kind of housing crisis that London has been saddled with.”
Since 2010 some 300,000 people have been helped into homeownership through government-backed schemes.
A Department for Communities and Local Government spokesman said while this was good news more needed to be done.
“…we know there is more to do, which is why we have set out the most ambitious vision for housing in a generation, including delivering hundreds of thousands of homes exclusively for first-time buyers,” he said.
