Record fall in owner-occupation in England

The number of owner-occupied households in England fell by 83,000 from 14.621 million in 2006 to 14.538 million in 2007, according to government figures. This was the largest annual fall on record. It is also the second successive year that the number of owner-occupiers in England has fallen. Similarly, the rate of owner-occupancy dropped during 2007 from 70.3% in 2006 to 69.8%; the lowest rate since 1998.

National Owner-Occupancy

The fall in owner-occupancy in 2007 was driven by a 2.0% (164,000) fall in the number of those buying a home with a mortgage. The number of those owning their home outright (i.e. having either bought with cash or paid off their mortgage) failed to increase sufficiently to offset this decline, rising by 1.3% (81,000).

The number of owner-occupied households has risen by just 85,000 (0.6%) during the past five years. This compared with a 697,000 increase in the previous five years.

Owner-Occupation By Age Group

The number of owner-occupied households between 16 and 44 years old fell by 235,000 between 2005 and 2006 more than offsetting the 211,000 increase in the number aged over 44 years old. The continued decline in owner-occupancy for those under the age of 34 was a main factor behind the overall decline. The number of owner-occupiers in the 25-34 age band in 2006 was 106,000 lower than in 2005. There was also a 115,000 decline in the number of owner-occupiers in the 35-44 age group.

The number of owner-occupied households between 25 and 34 years old has fallen by 322,000 in the past five years. There were also declines in the number of 16-24 year old owner-occupiers (43,000) and those in the 35-44 age group (56,000) between 2001 and 2006.

Owner-Occupation By Region

There has been a broad north/south divide in the direction of owner-occupation over recent years. Between 2001 and 2006, the level of owner-occupation in the north increased by 345,000 (5.1%). In contrast, owner-occupation in the south fell by 92,000 (-1.2%) over the same period.

Regionally, London experienced the only decline in owner-occupation between 2001 and 2006 with an 111,000 (-6.3%) fall. The South West recorded the smallest increase at just 21,000 followed by the East of England (28,000).

At the other end of the spectrum, the North West recorded the largest rise in owner-occupation between 2001 and 2006 with an increase of 136,000 (7.1%). The West Midlands, at 75,000, experienced the second largest rise in owner-occupation followed by Yorkshire and the Humber (56,000).

Local Authority Owner Occupancy Trends

At a local authority level, Castle Point in Essex has the highest owner-occupation rate in England with 88.5% of all households being owner-occupiers. 29 local authorities in the UK have owner-occupation rates above 80%.

Blaby in Leicestershire (87.0%) has the second largest rate of owner-occupancy in England, followed by Fareham in Hampshire (86.1%) and Rochford in Essex (88.5%). The lowest rates of owner-occupation are in central London; Tower Hamlets (29%) and Southwark (31%).

Privately Rented Households

The number of households living in privately rented housing rose by 107,000 (4.3%) in 2007 to just under 2.6 million. This continued the upward trend of the previous few years with the number in the private rented sector increasing by 483,000 (22.9%) in the past five years. The proportion of households renting their homes privately has risen from 10.3% to 12.5% since 2002.

Long Term Trends

The rate of owner-occupancy increased by 46% between 1918 and 1997.

The private rental sector was greater than both the owner-occupied and social rented sectors until the mid 1950s. By 1961 the rate of owner-occupancy (43%) had overtaken private renting (34%) as the most common type of housing tenure. The sharpest rise in owner-occupation was during the 1980s as a result of the Thatcher government's Right to Buy scheme. The rate of owner-occupation increased from 57% in 1981 to 68% in 1991 and has remained between 68% and 70% since then.

Martin Ellis, chief economist at Halifax, said: "The fall in the total number of owner-occupied households in England in 2007 largely reflects the increasing affordability difficulties faced by many potential purchasers as a result of the rapid rise in house prices in recent years.

The figures for owner-occupancy clearly demonstrate that these affordability issues are most pronounced amongst younger people and in southern parts of England."