The news that property ‘ownership’ in the Manchester area has slumped to ever-new levels isn’t just bad news for first-time buyers. It’s also bad news for all right-minded people who hope that the UK economy will one day shrug off its imbalances and head towards what Theresa May has declared will be a society that’s equal for everyone.
Maybe we should ponder the statistics of so-called ‘ownership’ a little more carefully. The term refers for the most part to those with a mortgage (whose homes are effectively ‘owned’ by their bank or building society). Those who own their homes outright are in the minority.
Since the financial crisis of 2009, mortgages have been more difficult to come by, and especially so for would-be first-time buyers. In addition, house prices across much of the country (and particularly in cities) are now hopelessly out of kilter with incomes.
For some, even saving for a 5% deposit (for a 95% mortgage) is a massive ask. This is especially the case where most of their income is swallowed up by rent. Apologists for the burgeoning buy-to-let private landlord sector blame high house prices for high rents. In fairness, what they’re saying is that there aren’t enough houses being built to meet demand – hence the spiraling house prices that show no signs of abating.
Even in the post-Brexit era of ultra-low interest rates, the stumbling block for most young people hoping to hop onto the housing ladder is raising the deposit. Despite various government-backed schemes to help first-time buyers, high house prices are still locking out a whole generation of buyers.
The other unintended downside of low interest rates for first-time buyers is that house prices will very likely continue to rise, particularly if there are no new initiatives to boost the country’s housing stock. More controversially, ever-rising population numbers – boosted in part by poorly-controlled immigration – will create even greater long term demand for housing and the infrastructure that supports it.
The social fissures that a ‘housing famine’ will create are already being felt in large cities like Manchester. Governments in the 1930s, and again in the 1950s, intervened in the market by embarking on massive house building programmes. Margaret Thatcher’s great sell-off of council housing in the 1980s and 90s may have seemed like an inspired act of social emancipation at the time, but the subsequent whirlwinds we’ve been reaping are only now getting up to speed.
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