FEAR OF FINANCE

We are a nation of wannabe owner/occupiers. According to building society surveys people's main aspiration in the next 10 years is still to own a home of their own. In spite of falling property prices, negative equity and widespread fears of unemployment, the years of Thatcherism merely served to enhance the need to be king of your own castle.

Only this week John Redwood was renewing the Thatcherite commitment to ownership rather than renting. But owning is now easier said than done. People moved regularly up the property ladder, unleashing a DIY frenzy in their wake, because additional costs could be recouped in a matter of months as the property market moved ever upwards. Then the recession slammed the brake on the market and suddenly moving was much more expensive.

The costs of moving are as real as ever. The potential gains look more elusive year after year. The market in certain pockets of the country remains buoyant, particularly in central London, such as Islington and Battersea. In Scotland, medium-priced properties in Edinburgh are also doing well. But they are few and far between. So is it worth moving, or should you stay put until prices pick up?

David Miles at Merrill Lynch would encourage those who can move to take the step up the property ladder. "Now is a good time to build an exposure to residential property if you can afford to absorb the extra costs," he says. "As real incomes continue to rise, added to tax giveaways in the next Budget, before you know it the housing market will be in an upswing again." Importantly, Mr Miles does not believe that house prices will remain flat for ever. "Markets just don't behave that way," he says.

The message is that if you can afford to absorb costs now and wait three to five years to recoup, it is a good time to swap your one-bedroomed flat for something more castle-like.

Others are more cautious. The golden rule now, according to Rob Thomas at UBS, is to buy a property that you are really happy with and not buy just to speculate.

Even he, however, remains optimistic that the housing market will turn around. "The outlook is good once we get past the next two to three years of recovery," he says. "House prices should rise 5-10 per cent across the board."

The solution for those who need to move but cannot, or do not want to, wait the three to four years to make up costs is to rent. To rent is now considered more acceptable and is even considered positively trendy among young professionals.

Since 1988, driven by changes in law relating to short-term tenancies, the rental market has moved up nearly a third. There are nearly a quarter of a million properties throughout the UK for rent.

To capitalise on this trend, Kleinwort Benson Development Capital has funded a pounds 44.2m package for London & Henley, which will acquire, refurbish and let central London residential property in the pounds 125,000-pounds 250,000 price bracket aimed at young professionals.

Ian Grant of KB says there is a fundamental shift towards young professionals renting for several years until salary increases enable them to buy what they would like to live in.