The good old days of the 1970’s and 1980’s eh … with
such highlights lowlights as 24% inflation, 17% interest
rates, 3 day working week, 13% unemployment, power cuts … those were the days
(not)… but at least people could afford to buy their own home. So why aren’t
the 20 and 30 something’s buying in the same numbers as they were 30 or 40
years ago?
Many people blame the credit crunch and global recession
of 2008, which had an enormous impact on the Falkirk (Scottish and UK) housing
market. Predominantly, the 20 something first-time buyers who, confronting a
problematic mortgage market, the perceived need for big deposits, reduced job
security and declining disposable income, discovered it challenging to assemble
the monetary means to get on to the Falkirk property ladder.
However, I would say there has been something else at
play other than the issue of raising a deposit – having sufficient income and
rising property prices in Falkirk. Whilst these are important factors and
barriers to homeownership, I also believe there has been a generational change
in attitudes towards home ownership in Falkirk (and in fact the rest of the
Country).
Back in 2011, the Halifax did a survey of thousands of
tenants and 19% of tenants said they had no plans to buy a home for themselves.
A recent, almost identical survey of tenants, carried out by The Deposit Protection
Service revealed, in late 2016, that figure had risen to 38.4%,
with many no-longer equating home ownership to success and believing renting to
be better suited to their lifestyle.
You see, I believe renting is a fundamental part of the
housing sector, and a meaningful proportion of the younger adult members of the
Falkirk population choose to be tenants as it better suits their plans and
lifestyle. Local Government in Falkirk (including the planners – especially the
planners), land owners and landlords need an adaptable Falkirk residential
property sector that allows the diverse choices of these Falkirk 20 and 30 year
olds to be met.
This means, if we applied the same percentages to the
current 14,362 Falkirk tenants in their 5,984 private rental properties, 5,515
tenants have no plans to ever buy a property – good news for the landlords of
those 2,297 properties. Interestingly, in the same report, just under two
thirds (62%) of tenants said they didn’t expect to buy within the next year.
.. but does that mean the other third will be buying in Falkirk
in the next 12 months?
Some will, but most won’t … in fact, The Royal
Institution of Chartered Surveyors (RICS)
predicts that, by 2025, that the number of people renting will increase, not
drop. Yes, many tenants might hope to buy but the reality is different for the
reasons set out above. RICS predicts the number of tenants looking to
rent will increase by 1.8 million households by 2025, as rising house prices
continue to make home ownership increasingly unaffordable for younger
generations. So, if we applied this rise to Falkirk, we will in fact need
an additional 2,564 private rental properties over the next eight years (or 321
a year) … meaning the number of private rented properties in Falkirk is
projected to rise to an eye watering 8,548 households.
As an aside, I did some research recently about the
average age of first time buyers since 1990.
It you believe the hype that buying properties has recently become out
of reach of first time buyers, you would expect that the average age of a first
time buyer will have shot up over the last 10 years. Interestingly, the average of a first time buyer
is now just below 32 which is younger than it was in 1990 and younger than the
average age of first time buyers during the period since 1990. More about this in future articles.
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