Over the 10 years between the 2001 & 2011 censuses, the biggest shift in tenure across the domestic housing market was from mortgaged owner- occupation towards private renting. Across England & Wales levels of private renting between 2001 and 2011, whilst levels of mortgaged owner occupation fell by 9% (despite an 8% increase in the total number of households).

Levels of private renting doubled in the lowest tier of the regional markets, increasing by over 90% across each of the five lowest ward groups.

This reflects the difficulty faced by less affluent households in accessing home ownership on the one hand and no visible increase in the amount of social housing at the other.

In these markets, housing transactions have been hardest hit and slowest to recover, reflecting the profile of households and the amount of equity held in the owner-occupied segment of the market.

In the bottom tier of the market across all of the regions, transaction levels remain 58% below the five years pre-crunch. In the lowest value segment, namely the lowest tier of the North East, they have struggled to rise above one-third of their pre-crunch level.

Growth in private renting has also been seen in the more affluent tiers of the market. Even in the most valuable regional markets it has risen by 40% in the period 2001 to 2011.

In these markets, transaction levels post-credit crunch have been most robust, running at an average of two-thirds of pre-crunch levels, higher still in the most valuable parts of the London market.

Both transactions levels and the shift in private renting indicate that the gap between the different tiers of the market has widened. This is also reflected in the average sale price across the different tiers of the market.

Because the nature of housing stock selling in the post-credit crunch environment has changed (with more expensive property in each tier of the market selling), it is not possible to accurately determine market led house price movements using the raw Land Registry data used in this analysis.

However, we are able to compare the average sale price across each tier of the market, accepting that this can be influenced by a shift in the nature of housing transactions.

This shows that the most valuable parts of the London market have substantially outperformed any of the other tiers of the housing market, with the average sale price in the most valuable wards having increased by some 65% since the run up to the credit crunch.

More generally, across London the lower the value of an area, the lower the average increase in price. A less accentuated pattern is shown across the other regional housing markets.

At the extreme, the average sale price in the lowest tier of the market of North East England is currently some 19% below its pre-downturn level.

This highlights the extent to which an already fragmented UK housing market has become increasingly divided not just between regions but between the different tiers of the market within those regions.

Taken from
Spotlight: A Housing Market Divided