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18th September 2012

UK - decline of the residential mortgage
Trend

Hometrack, the property research company calculates that by 2014 more people will own their own homes than in the process of buying them. This is a sharp turn around from past decades.

The two main trends that are leading to this crossover are the 'baby boomers' bulge now in retirement or close to retirement and have paid for their homes and that fewer younger people are buying due to the cost and lack of availability of homes. Private renting has almost doubled from 9% to 16% of all residential properties. Hometrack add that the poor sellers market has also changed some home-owners into 'accidental landlords' because they are unable to sell a property in a location no longer suitable for them.

Owner-occupied households with no mortgage now own property worth an estimated £2tr, 38% of the total value of the housing market. Richard Donnell, Director of Research at Hometrack commented: “Looking at growth rates for mortgagees and non-mortgagees over the last 10 years and using this as a basis for forward projections, we calculate that by 2014 there will be more people owning their home outright without a mortgage than with. This is further confirmed by Hometrack’s analysis of housing stock by tenure which shows that the largest percentage of mortgagees have mortgages worth less than half the value of their home.”

Hometrack calculates that larger three and four bed homes account for 63% of the country’s private housing stock, while smaller properties - suitable for first-time buyers and downsizers - are in limited supply. Two bed houses account for just 18% of supply.