Hat-tip to paul at vancouvercondo.info for pointing out an excellent article ‘Are we better off renting?‘ in The Observer 14 Nov 2010. Read the whole article, it’s not only relevant to the UK. The irrational cult of homeownership has resulted in a misallocation of energies in many societies.
“The woman’s expression was one of mystification and mild disgust. “You’re renting?” she said, lowering her voice as though uttering a swear word. A few hours before, I had met this woman at a friend’s birthday party. We had fallen into a polite sort of chit-chat and when she asked where I lived, I told her that my boyfriend and I had just moved into a new house. We were renting, I explained – taking a step off the property ladder to see what would happen to the housing market before committing to anything more long term.”
67% of households in the UK are owner-occupied, down slightly from the all-time high of 71% in 2003. By 2020, that figure is forecast to slip even lower to just over 60%.
In 2008, the proportion of households privately renting had jumped to 14% from a low of just 8% in the late 1980s. The estate agent Savills predicts that this figure will rise to 20% over the next decade. And yet renting still carries with it a whiff of social stigma.
The figures that we have for pre-1900 housing tenure show that well over 90% of people rented. That means even quite wealthy people, who could have afforded to buy houses, didn’t. It wasn’t as closely associated with social status as it is now.
In 2007, 67% of German households were renter-occupied. You can still buy a house in Germany for the same price, in real terms, as you could in the 1970s. Only a third of Swiss households are owner-occupied.
Countries with high rates of home ownership (such as Spain, where 89% of households are privately owned) seemed also to have high rates of unemployment.
A study by the [UK] Centre for Housing Policy in 2003 found half of those living in poverty were home-owners.
Countries with a higher proportion of renters also have a higher GDP: Switzerland has a GDP of £46,719 per capita, compared to the UK’s £27,915.
“Almost everyone I spoke to for this article had spent a considerable amount of their time examining the issues and had emerged with serious misgivings about buying houses. And yet, of course, they all admitted to owning their own home.”