The CML research compared international trends in housing tenure and mortgage finance. The research shows that despite falling interest rates and mortgage costs, a decade of rising house prices has seen the proportion of first-time buyers in the UK fall more sharply than in the rest of Europe, the USA and Australia.
A pattern of falling home-ownership among young people emerged in five out of 10 countries surveyed. Only the USA showed a significant increase in home-ownership among young people, while there was a marginal increase in the Netherlands and Sweden. The fall in the number of UK first-time buyers has occurred despite the fact that, in stark contrast to the other countries surveyed, home-ownership for young households in the UK is much cheaper than renting.
Across the whole country, 70% of people now own their home, but UK owner-occupation lags many countries in southern and eastern Europe and does not match the aspirations of around 80% of UK residents who would like to be home-owners.
The percentage of owner-occupiers has continued to increase in the majority of countries included in the study, but now seems to be stabilising. In some countries, growth in the number of core middle-aged, middle-income owner-occupiers appears to have reached a plateau. Overall, people are becoming home-owners later in life.
The research concludes that the UK mortgage market is one of the most diverse, with a proliferation of new lenders and types of loan. There are signs that other mortgage markets are following the UK's lead. But the tax and benefit system has become less favourable for UK owner-occupiers. In a number of countries, there has been a gradual decline in support for home-ownership, but in many of them the sector is still treated more favourably for tax purposes than in the UK.
Commenting on the research findings, the director general of the CML Michael Coogan said: "The research findings present a clear case for the Government to look afresh at how tax and benefit policy is hindering the growth of home-ownership and adding to particular problems for first-time buyers. The tax burden on home-owners continues to grow but indexing the thresholds for stamp duty, inheritance tax and capital gains tax in line with house price inflation would help ensure that it does not worsen in future.
"Government policy on benefits is also unhelpful, with only six per cent of housing-related benefit paid to the 70% who are owner-occupiers. Encouraging the spread of home-ownership would help the Government fulfil a number of broader policy objectives. We call on the Chancellor to show his support for home-owners in the forthcoming pre-Budget statement."
