Age 27. Banker. Just moved from two-bedroom flat in Notting Hill into three-bedroom flat in Fulham, west London
"I don't think interest rates come into it. Until the housing market picks up - and I feel it's got further to go down - I wouldn't think about buying. A lot of it is to do with confidence. The fees for buying and selling are about 5 per cent. You've got to be sure you can get that back when you re-sell. If you rent there is no millstone around your neck.
I don't look at property prices but I do register the deals available for first-time buyers and I will definitely be buying sometime, perhaps next year. Rental is a short-term option. Stamp duty doesn't matter. We're renting a very nice place. I would prefer to come home to that at night rather than to some grotty place, just for the sake of buying a property."
PR manager for Staniforth in Manchester. In her early thirties. Renting a three-bedroom house in Knutsford
"I want to maintain my mobility. I have watched friends of mine frustrated because they can't sell their homes and I have read so much about falling prices that I would have to have more confidence in the property market before I would buy. I could live with the idea that property was not going to make me money, but not with the idea of it being a minus investment.
Renting is a pretty relaxed way of living. If something breaks down you call someone and they come and fix it for nothing. If you want to move, you can. If I had a family, security would be a factor. If prices were rising, it would make a difference. There are times when I would like somewhere to call my own, but on balance I don't feel I'm missing out."
Dear Kenneth Clarke,
With lenders, estate agents and some of your most vociferous backbenchers clamouring for a budgetary boost to the housing market, here are a few pieces of statistical and anecdotal evidence you might find useful. Neither the abolition of stamp duty nor extra tax relief for first-time buyers would, it seems, make much difference to the new generation of professionals choosing to rent rather than buy. They rent for personal rather than financial reasons. They are postponing their buying until they decide to settle down and have children.
Here are a few facts you might like to draw to your backbenchers' attention. Between 1989, the year of the property crash, and 1994, the market lost 360,000 first-time buyers. If buying were as popular now as it was in the mid-Seventies, we could expect to see 470,000 first-time purchases a year rather than 400,000. As we approach the year 2000 the number of potential buyers will shrink by around 10 per cent as the baby boom fizzles out.
This information comes to us courtesy of Alan Holmans, the Halifax senior research fellow at Cambridge University. Mr Holmans's most pessimistic forecast (which allows for some catching up by late starters, but a general fall in demand to purchase) has first-time-buyer numbers bumping along at 400,000 a year for the rest of the decade.
Even more relevant are the remarks of those missing buyers on their motives for staying in rented accommodation. A group of 28-year-old women, all single, working and renting, said they could see no reason to contemplate buying a property unless they wanted to marry and start a family - which none of them expected to do in the near future. Changes in taxation would not make a blind bit of difference, they said. They wanted to keep their options open.
Some were saving up for a deposit; others were spending their disposable income on holidays, weekends away and eating out. Most knew someone who was in negative equity and saw buying as a big financial risk. The word they associate with home ownership is "millstone".
Helen Rose's attitude is typical. A 28-year-old, working in financial services, she and her boyfriend rent a two-bedroom flat in Parsons Green, west London. "I might want to work abroad at some point and renting gives me the flexibility to move on," she said. "Even if there were some change in tax relief or stamp duty it still costs a lot of money to buy and at the moment there is no capital gain involved. With prices not rising, we don't feel we are missing out on anything. We do want to buy eventually, but we'd only buy somewhere because we really wanted to live in that place."
Willie Gething of Property Vision, which encourages its rental investment clients to focus on this age group, believes the habit of renting is probably here to stay. "If inflation stays low, why on earth would any 25-year- old want to buy a house?" he asks. "It is complete fantasy to think you can bolster the market by measures such as the abolition of stamp duty. It didn't deter 2.1 million buyers in 1988."
A report published last week by the Joseph Rowntree Foundation suggests that any government action should concentrate on what used to be seen as first-time-buyer properties. The owners of studios, one-bedroom flats and starter homes have suffered the worst price falls as the generation which would have bought their homes has chosen to rent instead. If the government could help shift those homes into the private rented sector, it would allow those owners to move on and release more property for the growing rental market.
While there is little you can do to boost the buying ambitions of these young workers, the government's plan to reduce income support to people who lose their jobs is only serving to put them off more. The news that this proposal has been abandoned would give renters a little more confidence that buying a house was not a road to potential ruin.
Yours in equity,
Anne SpackmanReuse content