The risks of home ownership

Abstract

Over most of the post-war period home ownership in Britain has been perceived as a relatively ‘riskless’ undertaking, and this has been one influence on the continuing popularity of owner-occupation as measured by people’s stated tenure preferences. For example, home ownership has been portrayed as offering assured and certain financial accumulation compared to the uncertainty of other investments, and as guaranteeing a greater measure of personal control, well-being and ontological security when compared to that experienced by tenants (Saunders, 1990). Of course, there has always been a cyclical component to the owner-occupier housing market, reflecting the economic cycle, and as prices and incomes have lagged and led each other (Hamnett, 1999). However, while for much of the post-war period, and certainly until the early 1980s, these cyclical processes have been unsettling and uncomfortable for home owners, market professionals and the economy, only infrequently did households find their home ownership financially unsustainable. One of the reasons why the cyclical processes could be weathered and their effects largely accommodated was that the fundamentals necessary to sustainable home ownership remained essentially untouched. For much of the post-war period home owners have been continuously employed in secure jobs with rising incomes. Any employment mobility was likely to be voluntary, the risk of unemployment was limited and, if it did occur, short term. All this was helped by the fact that until the early 1980s the overwhelming majority of mortgagors were professional and white-collar workers who were largely immune from the unemployment experienced by manual workers.