Buying and renting: Your biggest financial decision - in 10 charts

From BBC - November 10, 2017

Buying a home is the most significant financial decision in most people's lives. For tenants, paying the rent is the biggest monthly outgoing.

So it is little wonder that house prices are an obsession for some, and a source of frustration for others.

The financial crisis had huge implications for those wanting to buy or sell property.

Here is the story of what has happened to the UK housing market in the past 10 years.

1. House prices are rising... or are they?

The price of the average UK home has risen in the past 10 years, as you would expect. Prices of goods and services in general, as measured by the Consumer Prices Index measure of inflation, have increased faster.

So, in real terms, the average UK house price has fallen compared with a decade ago.

2. Price rises or falls depend on where you live

The average UK house price masks a massive regional divide. In London, the average property value has risen by nearly 70% in 10 years, whereas in Northern Ireland it has fallen by more than 40%.

3. This is not only a story of prices

The number of sales was 30% higher 10 years ago, so who is no longer buying?

Many people already with a home and a mortgage have chosen to stay put, rather than buy somewhere bigger. Recent tax changes have also cut the numbers of buy-to-let investors.

4. The housing ladder's rungs are further apart

Look at the difference in price when moving from a three-bedroom home to a four-bedroom one, and it is no surprise that many families have chosen not to move. Many may have spent their money on an extension instead.

A lack of four-bedroom family homes on the market has pushed up prices of this type of property. It means the cost of moving to a bigger house has stymied many people's dreams of moving up the housing ladder - perhaps to give the children their own room.

5. First-time buyers have not had it easy

Government schemes, such as Help to Buy, mean first-time buyers are still in the game. Despite this assistance, lenders have been much more demanding of young borrowers.

Mortgage providers wanted a much bigger initial deposit when they were left reeling by the financial crisis. Those deposit requirements have eased since, but first-time buyers still need some hefty savings, or help from their parents, to secure a home loan.

6. Pay has done little to help them

7. There's been a shift from owning to renting

8. The South has the lion's share of property wealth

9. Borrowing has been cheap for homeowners

10. Where can I afford to live?


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