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Sunday, 20 April 2014

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Home ownership predicted to fall over next decade

Rising prices, falling wages and banks reluctant to lend are not just locking single people out of the housing market. A study compiled by Cambridge University says the same barriers are also hitting more and more families with children.

Many are paying more than half their monthly income in rent – making it virtually impossible to save for a deposit. And the study concludes that renting could soon become the norm for young families.

It predicts that if the economy fails to improve, only 27 per cent of people will be in “mortgaged home ownership” by 2025, compared with 35 per cent now and 43 per cent in 1993-94.

Research by Carlisle estate agents Hayward Tod has led to the same conclusions, says director Adrian Tod.

“Buying has fallen by four or five per cent,” he says. “It’s definitely changed and it’s probably changing much more quickly than anyone thought it would.”

Mr Tod suspects the change could be permanent – with the culture coming to mirror that in mainland Europe, where renting is common.

“There isn’t a stigma attached to renting any more,” he explains. “People realise that they can rent good quality houses, often better than the ones they could afford to buy. There’s much more flexibility, you are not tied to an area.

“I think we are getting more European and people will see the benefits of renting more and more. There will be less focus on thinking: ‘I must buy’.

“If the banks start to lend a bit more sales might increase. But I think a lot of people will remain in the rented sector. They’ll decide there’s nothing wrong with it.”

Piers Morton, senior valuer with H&H King, has also noticed a shift.

“The attitude to renting has been changing over the last couple of years,” he said. “If people don’t have a lot of equity built up in their house they have started to feel it is not worth being a slave to their mortgage and are more confident about renting.

“In the past it was seen as a bit of a failure to be renting rather than buying, but now people are more open-minded and they are seeing the two options as ‘either/or’.

“In the past buying has swung back after a downturn. But unless it becomes much easier to borrow I think you’ll find more and more families renting in future.”

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