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Bank expert says home ownership to fall

Wednesday, 23 November 2011 11:53 AM

One of the Bank of England experts who sets interest rates predicts a future with fewer home owners and more renters.

Speaking the day after the government launched a plan to guarantee the mortgages of up to 100,000 new owners, David Miles, an external member of the Bank's monetary policy committee, said there would be a transition to a 'more resilient housing' market.

"It is not surprising that the recession and the financial stresses have had a huge impact on the housing market," he said in a speech to the Northern Housing Consortium. "The disposable income of the majority of households has fallen; uncertainty about future levels of incomes has increased sharply. Uncertainty pushes down on the value of long-lived assets, and few assets are as long-lived as houses."

He went on: "I do not believe that the housing market and the mortgage market will get back to where we were in the years leading up to the crisis. I also do not think we should regret that."

Mr Miles said that the main problem in the face of cautious lending was equity. That could come from owners themselves, by putting off buying to save for a larger deposit, perhaps into their 40s, or from more shared ownership and shared equity.

He added that the transition to lower owner-occupation was causing severe difficulties at the moment but there could be gains in future from a more stable housing market.

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