House Prices rise but will our Property Obsession Wane?

The latest Nationwide House Price Index declared that house prices had edged up slightly in July, increasing by 0.2% over the month and giving a fall of 0.4% annually.  It points to the stability in what remains a slow market stemming from the fact that the amount of available property has only risen gradually. Whilst there is bound to be a lot of uncertainty for prospective buyers in the current economic climate that will naturally hold them back from making a purchase, Nationwide also takes the chance to highlight a potential shift in levels of owner occupancy. The English Housing Survey shows that the level of owner occupancy has declined for the seventh successive year, falling from 70.9% in 2003 to 67.4% in 2009/10.  The question is whether this is a structural change in UK housing and a move toward more people renting in the future. This is a potential trend that another lender, Halifax, identified in a recent report on what it dubbed Generation Rent.  First time buyers are certainly struggling with the tough deposit requirements and high prices that persist.  Whilst there has been some improvement in the mortgage rates available for those with smaller deposits there’s still a long way to go and of course buyer confidence remains relatively weak. There is likely to be a gradual change in the UK’s approach to housing, as many either elect to rent for flexibility or find their path to ownership blocked until later in life.  As the Generation Rent report pointed out the desire to own a home persists with over three quarters of respondents that did not own a home aspiring to do so in the future.  The question therefore will remain one of feasibility as to whether our obsession with property ownership will eventually dwindle in the UK.

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