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Panorama Friday, 28 June, 2002, 17:43 GMT 18:43 UK
An Englishman's Castle
Windsor Castle
An Englishman's Castle

"An Englishman's home is his castle" goes the saying - and the British certainly seem more obsessed with property than some other nations.

68% of households in the UK are owner-occupied.

Though this is not the highest in Europe - with Ireland at 78% and Spain at 82% - the UK stands out because of the high level of mortgage debt.

According to figures from the Royal Institute of Chartered Surveyors, the UK's stock of mortgage debt in 1999 was 58.8%, compared to Ireland's 29.9% and Spain's 27.4%.

Standing mortgage debt as a % of GDP in 1999
Holland: 67.2%
UK: 58.8%
Germany: 56.4%
Ireland: 29.9%
Spain: 27.4%
Belgium: 27.1%
France: 21.2%
Italy: 9.2%

(Source: Royal Institute of Chartered Surveyors)
At the root of high levels of borrowing are high prices. House prices have been going up in every region of Britain - with last month's rate of increase being a record.

The market is at its hottest since the boom of the 1980s.

The average house price in Britain is now more than 100,000 and is going up by 28 a day - at a rate of roughly 15% to 18% a year.

Even in Scotland, where price rises have been lowest, they have still gone up by 8%.

Desperation

% of owner-occupied households
Spain: 82% (1998)
Ireland: 78% (1998)
Belgium: 74% (2000)
UK: 68% (1999)
Italy: 68% (1991)
France: 55% (1999)
Holland: 53% (2000)
Germany: 43% (1998)

(Source: Royal Institute of Chartered Surveyors)
The race to get onto the housing ladder is exacerbated by the shortage of housing.

The government says that in the next 20 years in England alone nearly 4 million new households will need homes.

The shortfall between supply and demand drives up prices, and worries of being priced out of the market increase people's desire to get onto the housing ladder - creating a vicious circle that has been spiralling upwards.

Compact solution

Now, in some cities, desperation to own a home has sparked the invention of the "microflat".

This is a concept that focuses on affordability and a compact design.

The flats are factory-built and assembled one on top of the other.

A possible microflat development
Microflats have 30 sq/m of living space
Richard Connor and Stuart Piercy designed the microflat because although they earn 30,000 - 35,000 a year, this is not enough to buy in London.

Stuart told Panorama: "After paying your mortgage, you have enough money to live, really. We're trying to keep it below 100,000 per flat. Looking at averages of about 180,000, 190,000, it's fairly... it is an affordable target."

Keeping payments affordable

Earlier this month, there was speculation that mortgages in the UK might have to double in length to 50 years if repayments are to remain within the reach of normal homebuyers.

30-year mortgages are already available from most lenders, but if house price inflation remains ahead of wage inflation - which is likely, say industry experts - the only way mortgages will remain affordable is by increasing the term to 30, 40 or even 50 years.

If it sounds like the property situation in this country is getting out of control, spare a thought for the Japanese.

Owning a property in Japan is even more expensive and, despite near-zero interest rates, some mortgages come with terms as long as 100 years.

Borrowers never in fact pay off the capital, leaving the property in the hands of the lender and the mortgage in the hands of the children.

And although microflats and interminable mortgages may leave some people cold, this is the price that some British people may find they will have to pay if the property climate doesn't change and they still wish to have their own "castle".

 WATCH/LISTEN
 ON THIS STORY
BBC Panorama's David Lomax
"These people are camping in the hope of getting their feet onto the housing ladder"
Estate agent Richard a Brassard - 16 years on
"In the last five years we've probably seen a 100% increase in house prices here"
Homeowner Rupert Band - three years on
"If I was going to buy to let now, I would have to think very carefully about doing it"
Homeowner Bhavini Chohan - three years on
"Some people look at it as an investment but certainly not me, it's not my cup of tea"
Homeowners the Felthams - seven years on
"There's always this thing that are the house prices going to crash down..."
The Housing Ladder



Tools

FORUM
 VOTE RESULTS
Do you think the housing market will crash?

Yes
 62.27% 

No
 37.73% 

1447 Votes Cast

Results are indicative and may not reflect public opinion


Visit the BBCi newly-launched property site for a wealth of information on buying, selling and moving
Buying, selling, moving with BBCi

See also:

29 Jun 02 | Business
05 Jun 02 | Business
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