The good old days of the 1970’s and 1980’s eh … with
such highlights lowlights as 24% inflation, 17% interest
rates, 3 day working week, 13% unemployment, power cuts … those were the days
(not)… but at least people could afford to buy their own home. So why aren’t
the 20 and 30 something’s buying in the same numbers as they were 30 or 40
years ago?
Many people blame the credit crunch and global recession
of 2008, which had an enormous impact on the Edinburgh (Scottish and UK)
housing market. Predominantly, the 20 something first-time buyers who,
confronting a problematic mortgage market, the perceived need for big deposits,
reduced job security and declining disposable income, discovered it challenging
to assemble the monetary means to get on to the Edinburgh property ladder.
However, I would say there has been something else at
play other than the issue of raising a deposit – having sufficient income and
rising property prices in Edinburgh. Whilst these are important factors and
barriers to homeownership, I also believe there has been a generational change
in attitudes towards home ownership in Edinburgh (and in fact the rest of the
Country).
Back in 2011, the Halifax did a survey of thousands of
tenants and 19% of tenants said they had no plans to buy a home for themselves.
A recent, almost identical survey of tenants, carried out by The Deposit Protection
Service revealed, in late 2016, that figure had risen to 38.4%,
with many no-longer equating home ownership to success and believing renting to
be better suited to their lifestyle.
You see, I believe renting is a fundamental part of the
housing sector, and a meaningful proportion of the younger adult members of the
Edinburgh population choose to be tenants as it better suits their plans and
lifestyle. Local Government in Edinburgh (including the planners – especially
the planners), land owners and landlords need an adaptable Edinburgh residential
property sector that allows the diverse choices of these Edinburgh 20 and 30
year olds to be met.
This means, if we applied the same percentages to the
current 142,872 Edinburgh tenants in their 68,034 private rental properties, 54,863
tenants have no plans to ever buy a property – good news for the landlords of
those 26.125 properties. Interestingly, in the same report, just under two
thirds (62%) of tenants said they didn’t expect to buy within the next year.
.. but does that mean the other third will be buying in Edinburgh
in the next 12 months?
Some will, but most won’t … in fact, The Royal
Institution of Chartered Surveyors (RICS)
predicts that, by 2025, that the number of people renting will increase, not
drop. Yes, many tenants might hope to buy but the reality is different for the
reasons set out above. RICS predicts the number of tenants looking to
rent will increase by 1.8 million households by 2025, as rising house prices
continue to make home ownership increasingly unaffordable for younger
generations. So, if we applied this rise to Edinburgh, we will in fact
need an additional 29,156 private rental properties over the next eight years
(or 3,645 a year) … meaning the number of private rented properties in Edinburgh
is projected to rise to an eye watering 97,191 households.
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