Global Home Ownership Falls
News Posted On: 21 February 2015
Home ownership is falling across the world, with many countries seeing sharp drops, according to a new report. Fitch Ratings’ annual Global Housing and Mortgage Outlook Report shows that stretched affordability and backlogs of repossessed properties pose a threat to home ownership worldwide. Meanwhile lending, particularly in the Eurozone, remains well below pre-2008 levels.
In the USA, home ownership has fallen from 69% in 2009 to 65% now, with the key drivers of this fall being foreclosures, mortgage scarcity and unemployment. In the UK, the situation is even more dramatic: the home ownership number six years ago was 73%, compared with just 65% now. Australia has also seen sharp falls in home ownership, even in the midst of the country’s ongoing property boom: Australia’s home ownership rate has fallen from 70.7% in 2000 to 67.5% in 2012 This is partly explained by the fact that while real incomes have yet to return to pre-2008 levels, housing prices have risen steadily for over two decades.
The phenomenon christened ‘generation rent,’ of tighter credit requirements and lower incomes pricing a generation of first-time buyers out of the housing market, is global too.
There is hope for property ownership, though. Low interest rates across the world are an encouragement to investor activity and to purchase. Improvements in affordability are foreseen for some markets and there is also likely to be some macroeconomic improvement that leads to rising incomes and corresponding rising home ownership rates.
Some of the current low rate is a result of the ongoing impact of the 2008 financial crisis. The effects have been particularly long-lasting in smaller economies on the periphery of the Eurozone. It is here that outlooks for home ownership rates and for the housing market generally are weakest. However, Fitch says it expects moderate house price growth of about 2% in the Netherlands, the UK, the USA and Canada. Eurozone corrections are expected to continue next year in Greece, France, Italy and Belgium.
Policy in Hong Kong and Singapore has been aimed at securing a ‘soft landing’ for those high-flying markets, which would increase access to their housing markets. However, the risk of a sharp correction remains in both countries.
New mortgage lending is expected to rise in all but seven countries: the USA, France, Belgium, Greece, Portugal, Hong Kong and New Zealand are expected to be exempt from the general improvement. Elsewhere consumer confidence is forecast to make a gradual return, but borrower caution, lender parsimony and low savings may conspire with policy to create stumbling blocks for forward movement in some markets.
Some markets are set to see substantial improvements, according to the report. The UK is forecast to see leaps of up to 10%, partly a result of stock that enters the market when the traditional regional bias is reversed and housebuyers look outside the high-priced South-East for homes. The Netherlands is also forecast to experience rapid rises, while the Eurozone periphery is expected to remain weak.
Written by Les Calvert of www.property-abroad.com
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