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March 26, 2007

Home Ownership Falling

So says The Times:

The number of people who own their homes fell last year for the first time since the 1950s. About 12 per cent of households, or 2.4 million, now rent privately, a figure that has been rising steadily for six years.

The number of owner-occupied dwellings in England slipped by 25,000 to just over 14.6 million last year. The number of households with mortgages fell by 96,000 to 8.2 million. The number of homes owned outright continued to rise, by 71,000 to almost 6.4 million.

The figures break the pattern of steadily rising levels of home ownership. In 1953, the proportion of owner-occupiers in England was 32 per cent. This rose to 43 per cent in 1961, 51 per cent in 1971 and peaked at 75 per cent in 1981, or 9.9 million households. Although the proportion of homeowners fell, the actual numbers continued to rise until 2005.

Excellent. There's good evidence that too high a rate of home ownership leads to an increased unemployment rate. Without a vibrant rental sector (and no, council and association housing doesn't cut it, given the waiting lists) then, given the costs anbd delays in buying and selling houses (exacerbated by Stamp Duty etc) then there is too little labour mobility. The buy to let sector is therefore doing something quite valuable, increasing potential mobility and thus reducing the unemployment rate.

March 26, 2007 in Economics | Permalink

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Comments

On the other hand, high house prices are the biggest redistribution of wealth from the few young who can afford the massive debt to the old who've seen their houses double to triple in value; and from those who can't afford the debt to those who can BTL.

Nothing wrong with renting, but Britain's renter protection isn't exactly the same as Germany's.

Posted by: pl | Mar 26, 2007 10:12:10 AM

This is less than a 0.2% fall. Surely it's well within the sampling error?

Nevertheless it's interesting the proportion of homeowners has fallen since 1981. I assume this is something to do with more single-person families (I didn't understand Michael Gove's related point though).

Posted by: Matthew | Mar 26, 2007 10:20:22 AM

Thanks, these are exactly the statistics I was looking for for my Land Value Tax project, it was pretty clear that the number of private renting hosueholds must be going up, but I didn't know by how much.

Re Stamp Duty Land Tax and mobility, fair point, but surely that is a good reason for scrapping SDLT, is it not? Something else I shall recommend.

Posted by: Mark Wadsworth | Mar 26, 2007 10:36:27 AM

Tim,

I'm not sure that home ownership per se is such a barrier to labour mobility. If it were relatively cheap to buy and sell houses then there would be little problem.

However, the government has made it more and more expensive to buy and sell houses due to the levying of (ever increasing) stamp duty and (soon) the new Home Information Packs. When the government talks of flexible labout markets someone should point out that stamp duty works against these.

Posted by: HJHJ | Mar 26, 2007 1:05:02 PM

HJHJ: and so does the remarkably slothful, baleful English system of house purchase.

Posted by: dearieme | Mar 26, 2007 2:47:10 PM

On the other hand UK house sales/purchases are very cheap by international standards, aren't they?

Posted by: Matthew | Mar 26, 2007 3:31:50 PM

Property ownership is also correlated to lower crime rates. Just a point.

Posted by: Praguetory | Mar 26, 2007 3:46:01 PM

"On the other hand UK house sales/purchases are very cheap by international standards, aren't they?"

No they aren't. It is expensive and slow to sell property there.

Posted by: Peter Spence D. | Mar 27, 2007 12:53:29 PM