The downward trend was maintained in 2013/14, with a further drop in the home ownership rate to 63.3% down from 65.2% the previous year. Home ownership is now at its lowest rate for almost thirty years and is eight percentage points below the all-time high of 70.9% in 2003. Moreover, among owner occupiers, the proportion of people owning their home outright also overtook the proportion owning with a mortgage in 2013/14.
In particular, there has been a marked decline in home ownership rates amongst the younger age groups. In particular, among 25-34 year olds, the proportion of households owning their own home fell from 59% to 36% between 2004 and 2014.
Over the same period, the proportion renting has increased from 41% to 64%. For 16-24 year olds, the proportion renting increased from 76% to 91% over the same period.
The increase has occurred in the private rental sector, which currently houses 19% of total households - the highest share since the 1960s. Over the past ten years, the number of privately rented households has nearly doubled to 4.4 million, while the percentage of households in social rental properties has declined from 18% to 17%.
Despite the increase in the proportion of the population renting a home in recent years, the aspiration to eventually become a homeowner remains undiminished. The most recent English Housing Survey suggests that 25% of people in social housing and 61% of those in the private rental sector expect to be able to buy their own home in future. However, this remains a longer term aspiration, with around half of renters expecting it to take five years or more to take their first steps into the housing market.
Annually, house price growth slowed to 5.7% in February from 6.8% in January. Annual house price growth has now slowed for the sixth month in a row, with house prices falling by 0.1% in February.
Commenting on the figures, Robert Gardner, Nationwide's Chief Economist, said:
“February saw a further softening in annual house price growth to 5.7%, from 6.8% in January. This is the sixth month in a row in which annual growth has moderated, with house prices declining by 0.1% month on month.
“The broader economic backdrop has remained supportive of housing market activity. Mortgage rates remain close to all-time lows and consumer confidence remains buoyant thanks to a further steady improvement in labour market conditions. Indeed, the unemployment rate has continued to decline and earnings growth has picked up, particularly in inflation-adjusted terms, thanks in part to the sharp decline in energy prices.
“Nevertheless, the pace of housing market activity remains fairly subdued. There was a small increase in the number of mortgages approved for house purchase in December, up 2% from 59,000 in November to 60,300 in December, though it remains too early to determine whether this marks a turning point in activity."
Rob Weaver, director of investments at property crowdfunding platform, Property Partner, said:
"Strong consumer sentiment and a slowdown in house price growth are a curious mix. There is a backdrop to buy, namely rising employment, cheap mortgage rates and a significantly lower cost of living, but people continue to sit on their hands. In this sense, there's an element of paradox to the current market.
"It's easy to pin the reason for the reduction in activity on the impending General Election, and while this may be playing a role for some, usually the higher net worth, it's certainly not the main driver of reduced activity. Above all, the softening in the market reflects a caution about the rate of house price growth in the past two years. The market has risen quite spectacularly since 2013 and people are wary about buying at the top — and being exposed. Many have been there and done that and they don't want to be doing it again.
"However, despite the broader slowdown in the market, we believe that come the summer the market will once again have started to rise. The market is taking a breather and is certainly not on the brink of a longer term decline. A return to steady growth is a good thing and should be welcomed."
Alex Gosling, CEO of the online estate agents HouseSimple, added:
"Despite the increasingly benign economic backdrop, the property market is undergoing a sustained reality check. The Nationwide index's annual rate of price growth has fallen for six months in a row, and now stands at almost half what it was last August. The month-on-month figure has slipped into negative territory, suggesting prices fell in February, albeit by just 0.1%.
"But it's far too premature to suggest that the property market is running out of steam. The strong jobs market, rising real wages and cheap credit are fuelling consumer confidence, and for many renters the homeowning dream remains as attractive as ever.
"But the fillip provided by the Stamp Duty reforms announced late last year appears to be waning, and mortgage activity is fairly subdued. Tightened lending criteria are forcing first time buyers to save much more and much longer before they can get a mortgage. Last week's English Housing Survey found that just 36% of 25 to 34-year-olds own their home, compared to 59% a decade before.
"Steady, not stellar, growth is likely to be the pattern for house prices in 2015 - the double-digit rises of 2014 are history."
