Explaining the Growth of Home Ownership in
Why has home ownership become so popular in the United Kingdom?
• Rising living standards – As incomes rises, so demand for housing
increases because people can afford to enter the market. The demand for
housing has positive income elasticity although this varies according to the
type of property.
• Increased supply of mortgage finance – the market for mortgage loans
in Britain has become fiercely competitive leading to an expansion of the
supply of mortgages. Home-buyers can choose fixed-interest rate mortgages
which offer a fixed rate of interest over a number of years, and which make
it easier to plan mortgage repayments when assessing family/personal
• Lower mortgage interest rates – mortgage rates charged to
home-buyers have fallen to historically low levels. Even when house prices
are rising, lower interest rates have the effect of reducing the costs of
servicing (paying) the debt on a mortgage and this encourages more
potential home-buyers into the market.
• Subsidies and tax breaks for mortgage-payers – over many years the
government has offered subsidies for people seeking to buy a home. Since
1979 over 1.6 million council houses have moved from the local authority
sector into owner-occupied status. However, most of these housing
subsidies have now been phased out.
• The small size of the private rented sector – in many areas of Britain
there remains a shortage of rented properties at an affordable price and this
has made renting a property appear a poor substitute to buying one.
• The decline in the supply of social (council) housing
• The desire to accumulate wealth – the culture of owner-occupation has
many roots, but one of them undoubtedly is an expectation that income from
owning property will provide people with a means to enjoy a better