Recent statistics suggest fewer Americans are buying houses than at almost any time in recent decades. Here in the UK, we tend to follow trends set by our American cousins – so will their change in attitude help improve the wider image of home renting here, too?
In the US right now, rental housing is growing in scale at nearly double the rate of the previous decade, and home ownership has dropped to 64.7%, down from a peak of 69.2% in 2004. In contrast with the UK, American authorities have a specific planning definition for rental housing, encouraging many developers to build multi-family units in apartment blocks, with a restriction being in place that ensures these units must remain only for rental for the medium term. In the UK, no such restriction currently exists, meaning we do not have such a solid basis of rental apartments – they could be sold off individually at any time, should an owner prefer that option.
The change is noted in a recent feature on Salon.com, in which author Henry Grabar points out that while, on the face of it, this can be bad news for some, the change is no bad thing. Sure, he says, housebuilders don’t like the fact that there are less buyers, and the change may be driven to some extent (as in the UK) by an affordability problem as house prices escalate in comparison to real world wages. But the flip side is a more mobile and flexible society, who can adapt to economic change; and released from the “cult of home ownership”, people are more able to enjoy life’s great experiences in different ways.
The article cites reserach by Jordan Rappaport, senior economist in Kansas, who notes other changes likely in society. Renters have less interest in spending on goods and services for homes, with just an apartment to fit out; and they are less likely to live in the suburbs, needing two cars. So demand for cars, fuel and highways could fall, while renters they are more likely to spend a greater proportion of their disposable income on evenings out and restaurant dining, while being more interested in the provision of decent public transport.
Could it happen here? It already is, if you ask the new renters who are buying into the first institutionally developed rental projects. Blackstone, one of Wall Street’s savviest private equity real estate investors, bought into US rental housing in a big way, and now rents out around 45,000 homes. Will they be buying into the UK private rented sector? Don’t bet against it.
The Salon article in full is here.