Private rental home numbers to rise 1.2 million in five years as home ownership among the under 35s falls to one in six households
06 November 2014
The number of private rented households in England and Wales is set to rise by 1.2 million over the next five years. At the same time, levels of owner occupation will continue to slide as higher interest rates, greater mortgage regulation and an acute housing shortage further reduce access to mortgaged home ownership, according to latest analysis from Savills research.
By the end of 2019, there will be more than six million private rented households, 24 per cent of all homes in England and Wales, the firm forecasts. Total owner occupied household numbers are expected to fall by 200,000 to 14.67 million or 59 per cent of households, down from 62 per cent in 2014.
The shift to renting – a generational divide
Younger households across the UK will continue to be most impacted by this long term trend towards reduced home ownership. By 2019, private renting will account for two-thirds of all households where the age of the household reference person is under 35, an increase of 566,000 to 2.8 million, according to estimates from Savills.
At the same time, there are expected to be over half a million fewer owner occupied households in this age group, meaning that only around one in six (16%) under 35s are expected to be living as owner occupiers, down from 28 per cent in 2014.
Similarly, numbers of 35-49 year olds in private renting almost doubled from 2001 to 2011, to account for one in five households nationally. By 2019 there will be over 2 million private rented households in this age group, an increase of over 30%.
The situation is particularly acute in London, where average prices are 30 per cent above their 2007 peak making it more difficult than ever to access home ownership. A quarter of a million more London households are forecast to be living in private rented accommodation by 2019, taking the total to 1.24 million, well over a third (36%) of all households. Owner occupied household numbers will fall by 100,000 to 1.46 million, or just 42 per cent of the total Savills forecasts.
A different story for older households
While the 50-64 age group will account for a 175,000 rise in private rented household numbers, owner occupier household numbers are also forecast to rise by 337,000, a reflection both of an ageing population and the knock on effect of the growth in home ownership in the second half of the 20th century. Around 72 per cent of this age group will be owner occupiers by 2019.
The over 65s are the only age group where numbers of private renters are forecast to fall, by 42,000, as owner occupation in the generation continues to rise. Around 80 per cent of over 65s are expected to be owner occupiers by 2019, occupying over 5 million homes with very low levels of outstanding mortgage debt.
“These numbers present huge challenges to government, to institutional investors with the capacity to underwrite the delivery of new rental stock in volume, and to older home owners to pass down their housing wealth to younger family members,” says Neal Hudson, senior residential research analyst at Savills. “This is a long term trend that needs a multi-faceted, long term and deep-pocketed response.”
Savills Margaret Street
Savills Margaret Street
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