The feeling of security and a sense of pride from having a place to call your own is a dream many people have. However, getting on the property ladder is harder than ever with factors like salary, jobs and the housing market as an obstacle, and this is reflected around the world. New data analysis from one source suggests that home ownership is dropping on a global scale – with 22 of the world’s developed countries seeing a decline over the last decade. More conclusive indications from within the EU was also released by Eurostat.
The United Kingdom and Ireland saw the largest drop with a -11% decrease from 2008, indicating that rising house prices has put people off purchasing. As of August 2019, the average house price in the UK was €271,663, a 1.3% increase on last year – with a deposit of 10% usually required, prospective buyers would have to save up €27,166 to secure their home, on top of other fees like solicitor payments, stamp duty and moving costs. A house in Ireland will cost €263,000 – a 3.7% increase on the previous year.
Elsewhere in Europe, Poland was one of the only countries in the world to see a significant increase in the rate of home ownership, with an increase of +35%. The rate stands at 84% ownership – one of the highest in the world.
Three European countries saw steep declines in ownership rates, with Denmark (-9%) and Iceland (-9%) almost level with the UK and Ireland. For Denmark, this could be due to the popularity of subsidized social housing, where you can rent an apartment for a better deal than buying one. There are waiting lists and hoops to jump through, but the decreased rental payment can help you invest your money in other things. Iceland is alluring due to strong education, lack of crime and desirable healthcare system. However, as the country gets more popular with overseas visitors, the price of real estate has been soaring. In 2017 alone, the residential property price index for the entire country increased from 8.06% in the previous year to a whopping 23.15%. Construction in Iceland is unable to keep up with the demand for property.
The Czech Republic was the most expensive of all the countries analysed to buy a property. It costs an astonishing three times the monthly salary of €1021 to buy one square metre at the cost of €3008. This means it could take Czech Republic citizens 12 years to purchase a home.
The US housing market has been thriving over the last 12 years, because of a strong economy, lower mortgage rates and an increase in supply, creating a buyer’s market. In the US, one square metre of property costs $2,160. With the average monthly salary $3,044, buying a home is accessible to those earning a standard salary. This makes the US the most affordable country to buy property out of the 36 analysed.
However, despite property being affordable and the US being a buyer’s market, the rate of homeownership has decreased by -4.5% in the last ten years to 64.2%. This could be representative of the high cost of living, particularly in major markets such as Mountain View, Palo Alto, San Francisco, New York and Washington DC – the five most expensive cities to reside in North America.
Experts are currently predicting that the US housing market could crash. The number of privately-owned new houses being constructed was down by 9.4% in September, meaning that there are less homes in the construction pipeline. Higher construction costs, land shortages and a lack of labor could contribute to this, as well as fewer jobs being added to the economy.
Looking at the rest of the world, Australia is by far the country with the highest increase in home ownership, with an impressive increase of 86%. Australia also suffers from a deflating property bubble at present. The figure may seem surprising as house prices have been climbing for a few years in Australia – with Sydney one of the most expensive places in the world to buy property at a median price of $592,484 USD. However, there appears to be a fear of missing out amongst buyers, with clearance rates at auctions increasing to 75% in August, compared to 52% last year. The sheer size of Australian homes is another factor to take into consideration, with the average new build home size 186.3 sqm, 30 per cent larger than a new house built 30 years ago. This makes Australian homes the second largest in the world, behind the US.