Since the 1960’s when house building activity reached its peak more people than ever before owned their home rather than rented. Roll the clocks forward 50 years on, for many of the younger generation in Hampstead , the dream of buying their own home is dying…or is it? Since the turn of the Millennium, in Hampstead, (as in the rest of the Country) there has been a significant change in the proportion of people who own their own home. In 2001, 34.89% of homes in Hampstead were owner occupied; today the figure is 30.6%, a significant decline in such a short time. Buy to let landlords can find tenants because young people say they cannot afford a deposit to buy unless they inherit money or are given a loan from the Bank of Mum and Dad
In Hampstead, only 20.45% of 25 to 34 year olds have a mortgage. When you compare Hampstead against the national average of 35.93%, it just shows how different parts of the country have varying local housing markets. However, the really interesting fact is this …Going back to 1991 and nationally, 67% of 25 to 34 year olds had a mortgage. After 1945, the supply of properties being built kept up with demand as millions of council homes were built (the most being built in 1950s and 1960’s, surprisingly under Tory Governments!). Also private house building increased in the 1950’s, but especially in the 1960’s and 1970’s, and as the Country got more prosperous it meant that by 1971, there were more home owners than renters.
According to the Office of National Statistics (ONS) since the 1970’s, the population has grown by 11.35 % but the number of new properties being built hasn’t kept up at the same rate. The result is that there have been huge rises of property prices in the early ‘70s, the late 80s and more recently between 1997 and 2004. Interestingly, since the early 1970’s, out of the 34 richest countries in the world, the UK has seen highest property prices rises.
95% mortgages have been available to first time buyers since late 2009, but with property prices rising by 471.2% since the early summer of 1995 in Hampstead, prices headed north and first time buyers have been saving. The amount they have to save is continually rising at the same time. The stress on saving even for that kind of deposit, coupled with the new stricter mortgage rules introduced in 2014, means that most 20/30 something’s in Hampstead are renting instead of buying.
See the graph below that shows the fall in home ownership for Hampstead since the turn Millennium- (Source ONS- Office of National Statistics)
The issue quite simply comes back down to a lack of new homes being built. In the Hampstead parliamentary constituency area, only 406 properties were built last year whilst the population rose by 1,605. The supply of new homes has been limited by planning laws, local councils not having the money to build council houses, hard hitting green belt limitations, and our old friend NIMBY’ism. With a rising population and net migration, especially from the EU, the mismatch between demand and supply is why we have the problem. Until Politicians have the backbone to realise the Country needs a lot more decent homes built, the problem will just get worse.
Government Policy needs substance to address this imbalance; demand for rental property will continue to grow in the long term as these houses will take years to build. Despite the recent falls in rental values in the Hampstead area averaging 5% at the lower to middle end, provided landlords are realistic with their pricing expectations they will take up the mantle because people need a roof over their head at the end of the day ……fact.