According to the Chartered Institute of Housing and the Building Societies Association (BSA)’s UK Housing Review, average mortgage costs are now higher than at the peak of the last housing boom.
The sharp rise in house prices and mortgage costs over the last decade contrasts with the pattern of private rents, which the report revealed had kept pace with standard earning levels.
The rapid growth was attributed to the relative competitiveness of private renting as opposed to owner occupation and the greater choice available to households seeking such housing.
Steve Wilcox, professor of Housing Policy at the University of York, and author of the Review admitted that the rental sector was key to the evolution of the housing market.
He said: “Private renting has become far more competitive as an option for households compared to the cost of buying; the sector has grown by 21 per cent in the last five years across the UK and is fulfilling a significant role in the housing market.”
Adrian Coles, director-general of the BSA, confirmed that the private rented sector was in rude health; a factor he expected to continue in the coming months.
He commented: “With first-time buyers finding it increasingly difficult to get a foot on the housing ladder, the private rented sector is providing good quality accommodation to increasing numbers of people. Even with present market conditions it is still possible for both astute landlords and lenders to serve this sector successfully.”
Kevin Paterson, group marketing director at the Enterprise Group, suggested that the credit crunch had failed to dent the market and blamed property price growth.
He explained: “This has got nothing to do with the credit crunch that has hit the market, rather it’s the relentless creeping up of house prices to a stubbornly high level. Coupled with the rise in prices it is no surprise that mortgages are eating up a higher percentage of people’s income.”
