House or flat? Town or country? Big or small? Buy or rent? n

PROPERTY

FEW DECISIONS have a longer-lasting impact on your life than the decisions you make about where you live. Buy or sell a property today, and you may well be feeling the effect in 40 years' time. Far from being fanciful, therefore, thinking about 21st-century property trends is common sense. But what will these trends be? There seem to be two main possibilities, each very different from the other.

Let us begin with the nightmare scenario: all new private housing is built on greenfield sites in estates provided with neither schools, shops nor offices; any social housing is increasingly low quality, built on derelict urban land. Cities gradually expand in rings, with the ghettos on the inside and the wealthiest compounds on the outside, until all the land between London and Birmingham is covered with housing and roads. Welcome to Los Angeles in the United States of Europe.

The alternative is a return to our village roots, with homes, work, services and green spaces provided on a local community basis - in cities, much as they once were in the country. This is the vision that was articulated by Sir Richard Rogers in his recent series of Reith Lectures. It is also one that is gradually beginning to be put into practice by a few ecological pioneers.

While house-builders, planners and ministers decide which backdrop to paint on the property stage, we individuals must choose how to act out the detailed scenes. The biggest question facing us as we go into the 21st century will be whether to rent or buy a home. The old philosophy that anyone who can buy, should buy, may turn out to be truer than ever. What will change is the numbers for whom that is a realistic choice.

The only people who will be able to get a traditional mortgage will be those with a very secure income. Lenders will queue up to sell their "financial products" to lawyers, software developers and merchant bankers. They, in turn, will queue up to buy good family houses in good locations. Everyone else may find things slightly harder, however, and the fragmentation of the property market, which was so marked a feature of 1994, is likely to be even greater in 2004.

The prices of the best houses, which have already been rising for the past year or two, are likely to continue on upwards. Those who can afford them will buy them as comfortable homes and good investments. Green space is also likely to grow in value and importance. It is therapeutic, aesthetically pleasing and - as with period houses - no-one is making it any more. Already, at the top of the country house market, the setting is becoming as important as the property itself. You can alter almost anything in a house - and rich people invariably do. It's not so easy to grow half an acre of woodland.

For the most part, though, the wealthy will go on buying in much the same way as they have done in the middle and late 20th century. But what about the rest of us? Those who have been hardest hit by the property recession are primarily aged between 26 and 34. They are chained by negative equity to houses that they do not like and cannot leave. For many, the experience of seeing prices plummet or their homes repossessed has shattered for ever their belief that buying is best.

The next generation of potential owner-occupiers, now in its teens and early twenties, has, understandably, been reluctant to follow them up the owner-occupier path. Renting has been buoyant among young singles, while first-time buyers have become older and wiser. For these young people, renting in the private sector will continue to be the best option, as it gives them freedom and flexibility.

But what happens when they start having children? Families want stability and security of tenure, which current rental legislation does not provide. Many of the clerical and semi-skilled workers who fuelled the buying booms of the Seventies and Eighties are likely to be excluded from buying in the next century because their jobs will be deemed too insecure. If they cannot or dare not buy, where will they live?

The answer used to be, in a council house. It is quite likely that the next few years will bring a change of government and that, as a consequence, councils will be allowed to start building houses again. But few people these days aspire to life in a council house. What these families will want is the kind of house they might buy, except that they want to rent it.

The most crucial issue for the property market in the next century is how to meet this need. Perhaps local authorities might be persuaded to do it. Instead of building council estates, they could build mixed developments of social housing with low rents and bigger properties with higher rents, thus discouraging the trend which will otherwise arise towards social polarisation. Perhaps the answer lies in persuading institutional investors to help fund them. But whichever turns out to be the prefered method, it is highly desirable that some solution be found before the end of this century. Otherwise, millions face a future of domestic insecurity, at the mercy of a growing class of small private landlords who may choose to move them on whenever the mood takes them.

And what of the houses themselves? It tends to be the number of bedrooms which determines the size of a house: a six-bedroom house, for example, is clearly a big house. But with the increase in the number of old people, the high number of divorcees and the tendency for couples to have their children later, fewer and fewer people need six bedrooms. And, anyway, bedrooms will increasingly be interchangeable with living-rooms, as the rigid distinction between upstairs and downstairs is eroded.

Although the numbers of people living in each house will get smaller, the houses themselves may not, because of the trend towards home working. There may only be two people living in a house, but they may need one or even two offices. What will matter most is choosing a house which is flexible enough to adapt to your changing circumstances, including your changing work circumstances. Among other things, this means that the old Eighties advice to have as large a mortgage as possible is no longer valid: you should be as cautious about putting your money into property as you would be about any other investments.

And where should this flexible house be? It will be interesting to see how long the traffic jams have to be or how high the cost of parking before people give up driving long distances to work. Those who favour Richard Rogers's version of the future should try to live within walking distance of as many amenities as possible. Those who prefer the Los Angeles set- up should look forward to meeting their neighbours through the car window.

NEXT WEEK: the future of the family.

TRENDS

n Nearly 70 per cent of British householders are owner-occupiers.

n In the five years to the end of 1994, 300,000 homes were repossessed in Britain.

n 3.5 million people in Britain cannot move house, either because of negative equity or because they cannot afford the cost of moving.

n In 1988, top rate tax relief on the first £30,000 of a mortgage was 60 per cent. From next month it will be 15 per cent.

n In 1989, 60 per cent of householders under 25 were owner-occupiers; in 1993, 48 per cent.

n The number of British households applying to be accepted as homeless increased from 249,100 in 1986 to 339,400 in 1993.

SURVIVAL STRATEGIES

n If you can afford a good house, buy it; but don't "gear up" unnecessarily on a mortgage. It is no longer true that you cannot go wrong with property investments, and insecurity in the job market means that you cannot afford to be trapped in a home by negative equity.

n If you are young and childless, rent - especially if you can find a lease that gives you some kind of security of tenure.

n Go for gardens and green spaces, which are likely to increase in importance (whereas good transport links may do the opposite).

n Choose flexible accommodation.

n Don't forget that the value of your house can go down as well as up.