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Entering The Era of Shared Ownership

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United Kingdom  Halifax  Mortgage Availability  Shared Ownership 

Entering The Era of Shared Ownership

By - Monday 09 January 2012

The only answer that one can really give to this question in all honesty is, quite possibly. Looking at it pragmatically it is far more likely the renting is going to become a long term norm, but for those determined to get on the property ladder we could well see shared ownership become a norm, it is already becoming much more common.

The UK property market has changed over the last 50, 40, 30, 20 and even 10 years. Since the 50s it has been common place for men and women to find it easy to get jobs in their local area, and to spend their entire lives working in the same job.

That is no longer the case. For the last 20 years it has been becoming gradually more common for people to move around the country to find employment in their chosen field. Housing market analysts talk about aspiration (ambition) to own a home, but in the last 20 years this ambition has been more than taken over by ambition to find a good job, earn good money and to climb the ladder in our chosen field.

Renting is much more suitable for those who need to be flexible enough to move around the country for work or promotions, as the people with the fewest ties, who can move the quickest are often the quickest climbers on the ladder.

During that time we have also seen another change. Affordability of housing has been on the slide constantly. In the 50s the most someone would pay for a house would be 2 times their salary, with most costing much less than that.

According to reports the current long term average is 4 times. Looking at the historical Halifax house price index and comparing that with their House Price to Earnings Ratio index we can see that 3-3.5x is a much more comfortable level, and we see a series of mini-corrections when the 4 times mark is crossed, with a major correction in 1989 and 2007 when the HPER crossed the 5x mark. We can see that in fact 4x is only a long term average if you look at it since 2002, which is when the market was already heading for a fall.

However, we take from this that housing has become less and less affordable over the last 50 years. Along with the job factors laid out above, the lack of affordability, and at present a lack of mortgage availability and/or practicality (huge deposits) is all increasing the trend towards renting.

But at the same time, that is constantly making property ownership and even better investment. And at the same time you will always have those people who want the security, control and status of ownership, and who are unable or unwilling to reconcile just how much more renting costs in the long term. This doesn't make them any richer or anymore able to afford to buy outright, so for them shared ownership is the most suitable option.

We have covered the pros and cons of shared ownership in many articles on this site so we won't do so again. Shared ownership is here to stay and it is rising rapidly in the current climate, rising into a new norm? Only time will tell.

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*This page is provided for information purposes only and should not be construed as offering advice. IPIN is not licensed to give financial advice and all information provided by IPIN regarding real estate should never be treated as specific advice or regulations. This is standard practice with property investment companies as the purchase of property as an investment is not regulated by the UK or other Financial Services Authorities.

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