According to data released by the RICS (Royal Institution of Chartered Surveyors), the housing market in Britain is on a firm decline, with the monthly house price balance for May falling to minus-28 in May from minus-21 in April.
This decline, as opposed to an expected betterment in figures to minus-20 for May, marks the lowest level since January, and is being attributed mainly to strong concerns about Britain’s economic recovery as well as lending restrictions.
Falling monthly incomes – given that inflation has overtaken pay hikes – and fears of losing jobs, are other factors that have contributed to a significantly smaller share of population being willing to buy property. According to the Wall Street Journal, restricted lending has especially affected first-time buyers.
This RICS data has fuelled fears that were voiced earlier this month in a report by Halifax and the National Centre for Social Research, which said that “Britain is home to a generation of renters who are giving up on buying their own home”.
Referring to ‘Generation Rent’ as that share of the population which believes that they have no prospect whatsoever of buying a home, the Halifax report pens this number at around two-thirds (64%) of Britain’s non-homeowners, and attributes this trend to the perception among this share of people that banks are not lending as well as fears with regards to the application process and the size of mortgage deposits necessary.
Consequently, of the 8,000 prospective first-time home buyers between the ages of 20 and 45, surveyed for the Halifax report, nearly half of the survey respondents said that Britain is becoming increasingly like Europe, where renting is considered as being the norm.
In light of these emerging statistics, Alison Blackwell of NatCen warned in the report that the “Generation Rent” phenomenon could have major socio-economic implications on Britain.
“It would mean fewer homeowners being able to buy and therefore fund the construction of the new homes required in the UK to meet demand, resulting in a slowing down in the housing market. It could open up a widening of the wealth gap that already exists between home-owners and non homeowners. And people in Generation Rent risk insufficient finances at retirement,” she elaborated.
London Defies Declining Trend
Despite weak real estate sentiments in the rest of Britain, London’s property market continued to inch up, despite the weak market elsewhere in the country, according to the Royal Institution of Chartered Surveyors.
Being the only region to report rising prices in each of the last four RICS surveys, London is the only region in Britain where prices over the next three months are expected to move upwards, while the rest of Britain is likely to slide further.
While 32% more surveyors reported rising prices in London over the past three months, the outlook for Wales and the south-west is particularly low, with a balance of nearly 70% and 50% more surveyors (respectively) expecting prices to fall rather than rise.