Home ownership: Decline and rise?Posted: February 18, 2016 | |
Originally posted on February 18 on Inside Edge 2, my blog for Inside Housing
At first sight, headline results from the English Housing Survey published on Thursday are very good news for Brandon Lewis.
As the housing minister was quick to point out, the survey shows 2014/15 was the first year since 2003 when the home ownership rate in England did not fall. And, as this graph also shows, private renting fell for the first time since 1999:
He might also have pointed to this graph showing a surprise turnaround in the tenure prospects of Generation Rent:
The fall in ownership over the last 10 years has been most marked among young people, so this increase in ownership among the 25-34s in 2014/15 and decline in private renting is a marked reversal of that trend.
On the face of it then it’s good news for ministers in their quest to revive the property-owning democracy and bad news for doom-mongers (like me). Perhaps all those dire predictions that we are on course to become a nation of private renters are wrong? Maybe Help to Buy really is working? Did Labour commission the Redfern Review into the decline of home ownership to look at a problem that no longer exists?
However, the minister might be wise to wait a while before he declares ‘mission accomplished’. For starters, just looking at the overall home ownership rate ignores the split between outright ownership and mortgaged ownership. The former continued to rise in 2014/15 (the legacy of the previous rise in ownership as people pay off their mortgage) while the latter fell by 84,000 (as fewer households managed to enter the market).
If you look at the last five years (roughly coinciding with the coalition government), mortgaged ownership fell by 848,000 households and private renting rose by 923,000.
Similarly, while Lewis highlighted an increase in the number of social tenants expecting to buy the home they’re in as a triumph for the Right to Buy, the survey also shows further declines in the proportions of social and private tenants who are expecting to buy.
Tenure change takes time and he could still be right to hail this year’s numbers as a breakthrough. However, if you look below the surface of this year’s numbers doubts start to emerge. Whether it’s the sample size or the survey method or some other problem, some of them do not quite add up.
For starters, what apparently happened in London contradicts everything else we know about its rising population. According to the EHS, the number of households in London fell by 126,000 in 2014/15 and almost all of the decline happened in the private rented sector. This contradicts lots of other evidence about the rising population of the capital so barring a huge rise in sharing this suggests it could be unwise to rely on one year’s data.
In retrospect, it looks possible that the figures for 2013/14 could have been skewed. These showed an apparent 247,000 (32%) rise in private renting in London in a single year.
If that seems unlikely, then it could be that last year’s gloom was overdone. In my blog this time last year, I also highlighted another anomaly: a completely implausible 264,000 rise in social renting as well as a huge shift from owning to private renting.
Put in this light, perhaps last year’s survey was not as bad for ministers as it seemed at the time and this year’s results are not as good as Brandon Lewis makes out. Smooth them out and the trends over time still see private renting overtaking social renting, outright ownership overtaking mortgaged ownership and declining ownership rates among younger people. Among the other changes highlighted in this year’s EHA, the number of families with dependent children in private renting has risen by 910,000 in the last 10 years.
In summary then, Brandon Lewis has some cause for celebration about home ownership. You should also prepare to hear more from him and other ministers about a 237,000 rise in households in the social rented sector under the coalition. True that obscures the shift from social to affordable but it still compares to a 421,000 fall under Labour between 1997 and 2010.
But he should be careful not to overdo it. On the one hand, if this year’s figures really show the turnaround he claims, doesn’t that undermine the case for the precipitate rush to starter homes as the expense of everything else? On the other, next year’s survey may yet show a bleaker picture once again.