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The housing market fails to understand why people want housing

Conventional wisdom sees buying a house as an investment decision. That's not the whole truth
The housing market fails to understand why people want housing

My wife and I are a 30-something-year-old couple renting in Croydon looking to get a mortgage to buy there. While we are fortunate enough to be two millennials in a position where we are even considering buying a flat in London, that in itself is the problem with the housing market.

In 1997, when an English home cost around 3.5 times average annual earnings, the idea of two 30-somethings buying their own home wasn’t really an idea at all. It was a banal fact of life. However, by 2020, house price to annual earnings had rocketed to 7.9 times. As of 2022, that figure has hit 9.1 times. All of this has led some to ask a question unaskable 25 years ago: should young people even bother trying to buy a home?

On the one hand, this is an investment query which you can answer with raw data. If you’re renting a flat for £500 per month – whether that’s on your own or sharing with someone else – and you do so for four years then that’s £24,000 you’ve given to a landlord rather than invested. Buying a house might mean paying more a month, but it is money you are investing into something you own.

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