The ‘generation rent’ mantle which is widely used to describe today’s young professionals is pretty apt according to the findings from the UK government’s annual English Housing Survey.
The data show that over the past ten years the proportion of people aged between 25 and 34 and living in the private rental sector has almost doubled from 24% in the 2004-05 survey to 46% in the most recent 2014-15 survey.
This highlights how tough it is to get on the UK’s housing ladder - despite low mortgage interest rates - as house price growth continued during that period, pretty much unabated.
The survey produced by the Department for Communities and Local Government, also shows that not only is there a greater proportion of younger households living in private rented homes, but there are more families with young children living privately renting their properties.
In contrast, while the decline in home-owner occupation has stabilised at 64% down from a peak of 71% in 2003, the proportion of homes owned with a mortgage is lower for a second year in a row than those owned outright and mortgage free. The EHS data show that 33% of homes are owned without a mortgage compared with 30% that are mortgaged.
Again, this development has come at an extended period of low mortgage interest rates and reflects the difficulty first-time buyers encounter when they want to get onto the property ladder. The large deposits now required for homes – an average of £42,000 according to the EHS - whose value appears to go up and up is hard enough to come by. Combine that with a monthly mortgage that’s likely to take a good proportion of your monthly income and it’s a tall order to get onto the housing ladder and afford everything else a working person wants to enjoy.
This data certainly highlights the financial difficulties of buying a house in the UK today. However, what it doesn’t measure is attitudes – are younger people happier renting. After all, the wear and tear and general maintenance of a rented home is the responsibility of the owner. So, even though you’re essentially paying someone else’s mortgage you don’t have to shell out for a new boiler, bathroom or kitchen. This is an appealing situation to many people – including around just less than half of the German population according to the most recent figures available from European statistical agency Eurostat.
What the EHS does show is that a lower proportion of survey respondents who are private renters now expect to buy a property. In the 2013-14 survey 61% said they expected to buy a home in the future, this fell to 57% in the 2014-15 survey.