Why the London property market is heading back to the 1970s

cityscape b&WHome ownership and property rental in London are reverting to the patterns of the 1970s as fewer people can afford to buy a house and more rely on the private rental market to put a roof over their heads.

Owning your own home is a long held aspiration for millions of people and has been far more commonplace in the UK than in continental Europe, where long-term rental is a more regular housing decision. The desire to buy was fuelled by the property boom of the 80s and 90s, assisted by the Right to Buy scheme where tenants were allowed to purchase their council-provided property.

But the data on property tenure across London reveals that trend is being rapidly reversed and the pattern of ownership, private rental, and social housing now resembles London in the 70s.

After climbing to its peak in the 90s owner-occupation had fallen to 50% by 2011. And the squeeze on social housing due to the reduced amount of council housing stock has meant an expansion in the private rental market last seen on this scale in the mid 70s.

Housing tenure type

The profile of private renters is also changing. For years this has been the housing choice of singles and young couples. Increasingly it is the choice for families. A third of the private rental households in London in 2011 had children. 10 years earlier it was just 20%.

Housing tenure profile

This growth of private rental is also being driven by migration, both national and international. The Labour Force Survey in 2014 revealed that 80% of those who have recently moved to London from abroad, and 70% who have moved from other parts of UK, are in private rent homes. This may be a reflection of a temporary decision to move to London to work rather than to settle, but it also reflects the affordability of home ownership in the capital.

The desire to buy appears to be still strong. The English Housing Survey data on resident’s level of satisfaction with their home and the way they have obtained it reveals that 80% of those in private rental were happy with the accommodation, but far fewer where happy about being in the private rental sector.

Housing tenure satisfaction

While the economic circumstances do not make owning a home an option for many, these survey responses indicate a desire to do so, which is perhaps deeply imbedded in the UK culture.

Source data

See also

The jobs success and housing failure causing a crisis for the capital

Families face the biggest premiums for renting homes in the capital

Under 40s locked out of housing market destined to be “generation rent”