Tuesday, 7 January 2014

Renting vs Buying in the South-West

The housing market is certainly much more buoyant since twelve months ago:
Average UK house price rose 8.4% in 2013 after December surge | Money | theguardian.com

But many fear this will lead to less affordable housing:
"If demand continues to run ahead of supply in the quarters ahead, affordability may become stretched," said Robert Gardner, chief economist at Nationwide, who compiled the house price data.
Bubble fears as house prices jump most in four years - Telegraph

The South West has seen considerable rises:
HOUSE prices in Bristol have gone up 39 per cent over 10 years 
– far outstripping wages, new figures show.
Bristol sees house prices go up by 39% in the last decade | Bristol Post

Renting, it seems, is becoming the only option in the UK:
BBC News - How do you prepare for a lifetime of renting?

Generation tenant: 

How Britain has become a nation of renters in just 10 years 

(and TORQUAY is among 51 new rental hotspots)

The number of people renting homes has soared by a staggering 89 per cent in 10 years as householders struggle to get on the housing ladder, new data has revealed. 
Figures show a dramatic rise in the number of tenants in England and Wales, from 1.9million households in 2001 to 3.6million in 2011.
Experts say the phenomenon - dubbed 'Generation Rent' - is down to the battle many face to raise enough money for a house deposit, and the older generation being forced to release capital from their own homes to pay for their care in later life. 

Housing experts believe that although home-ownership will remain constant, more people will have to rent for longer as it becomes increasingly difficult to raise a deposit.

Stephanie McMahon, Head of Research for Strutt & Parker said: 'The private rental sector has changed dramatically over the past decade, and although this brings us more in line with our northern European peers we are still some way off the scale of the rental sector in countries like Germany and Switzerland. 'In our view it is likely that overall home ownership will remain between 60 and 70 per cent over people’s lifetimes, but we will see much more openness to rental at different life stages and for longer time periods.'
Generation tenant: How Britain has become a nation of renters in just 10 years (and TORQUAY is among 51 new rental hotspots) | Mail Online

But rents too are becoming 'unaffordable' across the UK:
Cost of renting home in Edinburgh hits record high - Edinburgh Evening News
Jon Griffin: Young left to face a future of rent and debt struggle - Jon Griffin - Birmingham Post

Unfortunately, 'regulation' of the rental market is quite a political minefield, although the Tenancy Deposit Scheme, recently introduced, does give some protection:
Tenancy deposit protection - GOV.UK
Tenancy Deposit

Some interesting opinions, however:   
Is a high home ownership rate a sign of a successful country?                                                
Resolution Foundation · Blog | Building homes for ‘generation rent’
Cultural shift towards renting set to continue in 2013

Renting - Britain's social scandal that is being ignored
Private landlords threaten eviction as they pocket half of their tenant's wages, but politicians do nothing
 Saturday 4 January 2014
What isn't tackled is the underlying issue of supply and demand. We are living in a modern Speenhamland system where, as I've written before, employers pay below-subsistence wages, subsidised by tax credits, which mean workers can never afford to buy. Meanwhile high rents to landlords are subsidised by housing benefit.
The government promises £100bn for new infrastructure, but on housing it is only planning £3.5bn over the next four years. That's just a tenth of what will be spent on housing benefit over the same period. House building should be Britain's number one infrastructure priority – not just for buyers, but renters too.
Renting, Britain's social scandal that is being ignored | Money | The Guardian

November 28, 2013 5:21 pm

Conservatives and the cult of home-ownership

Promoting house-buying is a form of stimulus that does not overtly add to the fiscal deficit

British governments are inhibited from subsidising manufacturing industry or too blatantly depreciating the currency by international agreements and the fear of retaliation. So when Conservative-led governments are in power, the intervention overwhelmingly takes the form of stimulating housebuilding.

Conservatives and the cult of home-ownership - FT.com

But it isn't just a 'conservative' thing: it does seem to be a particularly 'Anglo-Saxon' thing, as this article on Australia indicates.

Renters are the losers in the property game: Time to rid the stigma: Academic

By Kate Shaw
Tuesday, 07 January 2014
Australia is the world capital for property speculation. Australians play property like Monopoly: buying, selling, demolishing, rebuilding, extending, renovating, always with the promise of appreciation on resale. The contribution to GDP of real estate transactions alone is the highest in the world, and three times higher than that in the US.

Around one in seven Australian taxpayers owns one or more investment properties, aided by generous tax concessions. Australia has one of the highest levels of household debt in the OECD due to borrowings for property purchases.

This amounts to what is effectively an infinite demand for property in Australia, exacerbated by a growing global investor market. The resulting competition at sale is the main reason for Australia’s rapidly declining housing affordability. While some (but by no means all) of this activity is creating new dwellings for rent, the rents are increasing too.

Renters last
Renters are the losers in the property game. Not only do they struggle with high rents but tenant protection in Australia is among the weakest in the developed world. This is not coincidental: Australia’s 1.8 million and counting property investors support and are supported by tenancy legislation heavily weighted in favour of landlords. This produces a fundamental lack of security in rental housing.

Renters are the losers in the property game: Time to rid the stigma: Academic

Whereas on the Continent, apart, it seems, from the former-communist states
Housing in Europe - Wikipedia, the free encyclopedia
renting holds no stigma:
Why the Germans and French prefer to rent - House & Home - Property - The Independent

Brits buy homes, the Germans rent - which of us has got it right?

Germany seems to offer cheaper rents and more choice than the UK. But is the grass really grĂ¼ner? 

Jon Palmer 19 March 2011

So what keeps prices down, and why don't more Germans buy? Firstly, there is the supply of good quality rental accommodation.

Secondly, the Germans keep the purse strings tight. Stringent lending requirements ensure there isn't an oversupply of housing finance available – lenders are risk-averse and normally require a deposit of 20% or substantial collateral, and proof of good earnings over several years, which for many would-be buyers is impossible.

One reason why the Germans aren't as obsessed with homeownership as the Brits is that it has been many years since Germany has experienced a house price bubble. Unlike most of the rest of Europe it didn't enjoy a housing boom during the past decade. In fact, real house prices have fallen since the mid-1990s

However, the property scene in the West-Country - and in Sidmouth - is clearly weighted in favour of the incoming retiree looking to buy:
Futures Forum: Migration, Sidmouth and East Devon
BBC - h2g2 - Sidmouth and The Sid Valley, Devon, England. - A6092480

... rather than supporting 'local people' on a low or medium income looking to rent:
How bad are renting conditions in the south west? | Alex Johnson | Independent Property Blogs

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