Homes or investments?

This content applies to England only.

As house prices in England tripled between 1997 and 2007, more and more people believed that the prudent way to invest for the future was to buy property.

But the recession challenged our society's faith in property as a solid investment ad rasied wider questions about the function housing plays in our society. Rather than an investment, we should view property first and foremost as a home for living in.

Shelter believes everyone should have a home and that current housing policy needs to change to make this a reality.

  • More than 14.6 million households in England are now owner-occupiers (68 per cent of all households). [1]
  • Home ownership is the tenure of choice for the majority of people.
  • In 2009 repossessions rose to 48,000 in the UK. [2]
  • The number of mortgages more than three months in arrears in the UK rose to 176,000 in September 2010. [3]
  • The UK is now more polarised by housing wealth than at any other time since the Victorian era.
  • 21 per cent of 18- to 44-year-olds without children (2.8 million) admit they are delaying starting a family because of a lack of affordable housing.[4]

The origins of the crisis

Home ownership in England has been rising since the 1970s, supported by a series of pro-home ownership government policies, such as the Right to Buy (for council tenants) and the Right to Acquire (for housing association tenants).

From 1992 to the beginning of 2008, UK house prices rose rapidly for a number of reasons: [5]

  • a long period of economic growth: average growth was around 2.5 percent for 15 years, increasing incomes and confidence.
  • low interest rates: this was a significant factor increasing demand for houses, given most UK mortgages have variable rates.
  • increasing number of households: due to various factors including an ageing population, smaller households and increased levels of net immigration.
  • an increase in the number of people buying second homes.
  • increased availability of mortgages: banks relaxed lending criteria making it easier to borrow higher salary multiples; new types of mortgages were also introduced such as interest-only and 50-year mortgages.
  • buy-to-let market: more people bought houses to rent out, in the hope they would not only benefit from capital gains but significant rental income too.
  • fundamental shortage of supply: the main reason for the high cost of housing in England was that supply failed to keep pace with demand. This situation hasn’t changed, there is still a significant lack of housing in the UK.

When house prices were rising so rapidly, many people sought to ‘get themselves on the property ladder’ by any means necessary, encouraged all the time by a raft of new property programmes, magazines and websites.

Lenders offered increasingly risky loans, with some lenders in the ‘sub-prime’ market failing to take into account how affordable or sustainable home ownership would be for their customers.

During the boom years, house prices rose faster than incomes. Buyers had to borrow increasing multiples of their salary, stretching themselves to the limits of what they could afford. Now, after the credit crunch and in the face of public spending cuts, many borrowers are struggling to meet mortgage repayments.

Shelter's view

Shelter believes that everyone should have a decent and secure home. For some, home ownership remains an option, but for those on low incomes, it can be a very insecure path to follow, particularly at the moment. Households find themselves pushed to the limits of what they can afford, risking repossession and homelessness in the process.

Shelter is not opposed to private ownership and investment, but we believe more needs to be done to ensure everyone has a decent home. There needs to be more affordable home provision alongside more family-sized accommodation.

Above all, we believe the main solution to the current housing crisis is to build more social rented homes, which would help people currently living in insecure and unfit housing into decent homes.

[1] CLG, Survey of English Housing Preliminary Report: 2008/09, 2010

[2] Council of Mortgage Lenders, 2010.

[3] ibid.

[4] Shelter, The Human Cost, 2009

[5] Source:

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