Data from the Office for National Statistics shows renting is experiencing a revival. But what has caused the shift?
Home ownership in England and Wales has fallen for the first time in almost a century, research from the Office for National Statistics (ONS) has revealed.
The proportion of people who owned their own home fell from 69% in 2001 to 64% in 2011, while the last decade saw a rise in renters for the first time since 1918.
So what has caused the shift?
Changing trends
Back in 1918 77% of homes in England and Wales were rented while the rest were owner occupied.
But in the early part of the 20th century home ownership grew steadily and by 1971 there was an equal mix of households that owned their home and those that rented.
Growth in owner occupancy picked up in the 1950s as wages grew faster than the rate of house prices. So as homes were more affordable, ownership went up from 32% in 1953 to 42% in 1961.
And it continued to grow, reaching its peak in 2001 when 69% of households owned their home - turning the table on renting which then only accounted for 31% of households.
For the first time in 1981 fewer people rented compared to people that owned their home. This is largely down to the introduction of the ‘Right to Buy’ scheme which allowed tenants to purchase their social housing at a huge discount.
The next real turning point for housing tenure came in 2008 with the onset of the recession causing the first major shift in trends since 1918.
Barriers to home ownership
The drop recorded between 2001 and 2011 has been put down to poor wage growth, stricter lending and high house prices by the ONS.
[SPOTLIGHT]The rapid increase in private renting is linked to the decline in people being able to get onto the property ladder with a mortgage. According to the research from the ONS homes owned through a mortgage or loan finance fell by 749,000 to 7.6 million over the last decade.
The shock of the recession in 2008 meant lenders tightened up on what people could borrow and the disappearance of the 100% mortgage now means people need to save for deposits - made that much harder by stubbornly high house prices.
The average house price for a first-time buyer increased by around 96% between 2001 and 2011 and wages haven't been able to keep up. In 2001 the average house price was six times the average gross wage, but by 2011 the average house price was nine times the average wage. So households need to save longer for a sufficient deposit.
So even though buying a home is generally much cheaper than renting the requirement for a large deposit means first-time buyers are priced out of the market.
Generation rent
According to the ONS the percentage of households renting went up in all regions of England and Wales during the last decade.
Renting had its first increase since 1918 from 6.7 million to 8.3 million households.
Perhaps unsurprisingly London has the biggest proportion of renters with 50.4% of households in this tenure. Property in London costs £401,000 on average which is 1.6 times the average for England and Wales.
London often exists in its own bubble with over inflated house prices. But it also has a younger population who generally earn less, more people that are keen to stay flexible for jobs, and a bigger migrant population which find it harder to buy a home.
What do you think? Are you more likely to rent than buy a home now?
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