10th April 2013
Nearly four out of five British adults aspires to own their own home according to a YouGov poll of 8,183 adults, commissioned by the lenders’ trade body the Council of Mortgage Lenders.
The survey found that 79 per cent of British adults would like to be home-owners in 10 years’ time though it is is down slightly from 81 per cent a year ago. The trade body says this is one of the lowest levels it has recorded over the past 30 years. Some 44 per cent would like to own a home in the next two or three years.
“We would nevertheless characterise the desire for home-ownership as resilient, when viewed against the backdrop of protracted economic difficulties and a sharp decline in actual ownership rates,” says the report.
“We have used market research surveys to track tenure aspirations since the mid-1970s. Although these market research results may not be exactly comparable over time, because of changes to sample sizes and methodologies, the use of different research companies and slight alterations in question wordings, we believe they help to highlight and contextualise key trends in tenure aspirations over time. A routine question about people see as their ideal longer-term tenure provides a useful metric for monitoring deep-seated sentiment towards home-ownership.”
Who wants to be a home-owner?
Behind the latest headline measure, there appears to be an interesting divergence in aspiration trends across the different age groups.
All age groups continue to show a strong preference for home-ownership in the longer term, but there has been an appreciable drop amongst younger age groups over the past few years.
By contrast, those of retirement age appear to value home-ownership more highly than ever before.
Table One: Preferred tenure in 10 years’ time, by current tenure
Preferred tenure in 10 years’ time
Living with relatives or friends
|Living with relatives or friends||70%||7%||9%||2%|
Source: YouGov 2013
1. Social housing refers to renting from a local authority, council, housing association, housing trust or some other registered social landlord.
2. For clarity, don’t knows and other tenure choices are not shown in the charts and tables in this report.
The report shows that a majority of private sector tenants 64 per cent and those sharing with parents, other relatives or friends 70 per cent aspire to become home-owners in the longer term, although both percentages are lower than a year ago at 76 per cent and 78 per cent respectively.
Who would like to buy a new home?
In order to help differentiate individuals whose aspirations to be home-owners were longer-term in nature rather than more immediate – and also to gauge the level of pent-up demand to transact more generally – YouGov asked respondents whether they would ideally like to buy a new home in the next two to three years. Overall, about 44 per cent of respondents would ideally like to buy a new home during the next two to three years. Those renting privately or sharing with parents, other relatives or friends, and 25-34 year olds – strongly overlapping groups – show the strongest appetite to buy.
The report also asked what is stopping people from owning a home.
Factors that inhibit buying a new home
When asked whether they actually expect to be in a position to buy a new home within the next two to three years, a little over a third (36 per cent) of the 44 per cent who would ideally like to move think that it is likely that they will do so. This means that about 16 per cent of all respondents would like to buy during the next two to three years and believe that it is likely to happen. Six per cent see it as very likely to happen and 10 per cent as fairly likely.
Existing home-owners are more confident about buying a new home than those renting privately or sharing with relatives or friends, yet these in turn feel much better placed than those currently in social housing. Thirty per cent of home-owners feel it is likely that they will be able to buy in the next two to three years, compared to 21 per cent of private renters, 20 per cent of those living with friends or relatives, or eight per cent of social renters.
Those aged 25-34 are more confident about buying a new home than other age groups, although most of the difference is in those seeing this as fairly likely per cent rather than very likely on ten per cent. Some of this greater confidence may reflect the peer expectations that go with this age cohort being a dominant group for first-time buyers.
The rankings touch on a range of issues, including the wider economic situation, incomes and living standards, as well as limited suitable properties being offered for sale and high transaction costs.
Mortgage-related factors are specifically cited by a minority of respondents, but they appear to rank some way below other factors. The report says it is feasible that a perceived limited availability of low-deposit mortgages would be a counterpart to insufficient savings and high house prices.
We also asked individuals what would significantly improve their chances of buying a new home in the next two to three years.
The report notes that respondents may see that getting a windfall would address a lack of savings, getting a pay rise and/or house prices falling would help to bridge the gap between house prices and earnings, and lower stamp duty would help to mitigate transaction costs.
The CML notes that mortgage-specific factors – lenders offering more low-deposit mortgages and lower mortgage rates – feature less prominently than other factors. Low-deposit mortgages were defined as those needing only a 5 per cent deposit.
What difference would more low-deposit mortgages make?
The research suggests that there is significant support, across all tenures and age groups, for the Government to make it easier for people needing a large deposit to get a mortgage. The proportion of respondents agreeing that this should be a policy goal 59 per cent outnumbered those opposing 14 per cent by more than four to one. A clear majority of those surveyed or 60 per cent also feel that it is unfair that borrowers who are only able to put down a small deposit have to pay a higher mortgage rate. The CML says that in anticipation of the Help to Buy mortgage guarantee scheme announced in the Budget, it asked what difference it would make if lenders were to offer more low-deposit mortgages.
While few respondents thought that this would make things worse, our research provides strong evidence that this may not be a panacea. Nearly half of all respondents or 46 per cent thought it would make no difference to their chances of buying a new home in the next two to three years. Presumably, for such individuals, many of the key factors shown in Chart Four, and a diverse range of other factors, would continue to limit their scope to buy. A third of respondents or 34 per cent were more positive, and thought that more low-deposit mortgages would help them, although more than 60 per cent only thought it would make things slightly better.
Those individuals who saw insufficient savings as constraining their chances of buying a new home were the most positive about more low-deposit mortgages, with nearly half of them -47 per cent – believing that it would improve their chances of buying.
Respondents who already thought that they would be able to buy were more optimistic about the likely impact than those currently unable, with 41 per cent of those able to buy in the next two to three years saying more low-deposit mortgages would improve their chances of buying, compared to 33 per cent of those unable to buy
Only about one per cent of respondents currently live in properties that are subject to shared ownership or shared equity schemes. When asked how willing they would be to give up a share in the subsequent gain in the value of their property if it meant they could get a mortgage sooner, a significant majority of respondents or 68 per cent appear unwilling to cede a share of equity to others. Amongst those who are not already home-owners, up to a fifth indicate some willingness to consider a shared equity arrangement, but relatively few – only 1-2 per cent – would be very willing in principle to explore this.
The report concludes: “Home-ownership clearly remains a very strong aspiration among the British. The recent reduction in appetite is almost certainly tied to the economic and financial difficulties that the UK and many other countries are experiencing. From this perspective, the Chancellor’s Budget measures to support home-ownership appear politically well-judged. However, individuals face a very diverse range of circumstances, which may be inhibiting their ability to buy their first home or move within the owner-occupied sector. While the pricing and availability of mortgages are widely cited as relevant factors, they do not head up people’s list of concerns in aggregate. Many other factors, relating to such issues as the wider economy, the state of the housing market and personal financial circumstances also loom large. This suggests that no single policy action – even one with the £130 billion firepower of the mortgage guarantee scheme – is likely to remove all the obstacles identified as blocking those who wish to buy a home.”