Q With the decline in mortgaged homeownership, the value of unmortgaged homes now exceeds those owned with a mortgage. Is this a decline that can be reversed?

A Increasing homeownership is the Government’s top priority for housing in this parliament. However, even just halting the decline in mortgaged homeownership will be a challenge. We have an ageing population that is increasingly paying off their mortgage and moving into outright homeownership.

Meanwhile, there are substantial affordability constraints for many of the prospective first-time buyers looking to get on the housing ladder. Unless the Government can substantially increase first-time buyer numbers (by at least 200,000 per year), the decline in mortgaged homeownership looks set to continue.

Q The value of the private rented sector has risen by 55% in five years. Is there any sign of this trend abating?

A We have a housing market with high prices relative to incomes and that means the cost of buying a home is a significant barrier to new buyers. The re-emergence of high loan-to-value mortgages has helped in recent years and the new Government schemes will probably increase the number able to buy.

However, the underlying factors contributing to this unaffordable housing market are likely to remain in place. As a result, despite attempts to dampen the attraction of buy-to-let, investment into the private rented sector will continue, which means the sector is likely to continue growing in both number of households and value.

Q Non-mortgaged homeowners are sitting on over £2 trillion of housing wealth. What are they going to do with it?

A 43% of net housing wealth is tied up in homes that are owned outright. These owners tend to be older and in some cases their homes are larger than they need on a day-to-day basis. Releasing this equity (and the homes) through downsizing or other means is regularly suggested as a solution for the housing crisis. Indeed, many households view their housing equity as a form of pension saving.

The problem we face in releasing this equity is twofold: we need to build more homes that older people actually want to move into and we need more people able to afford to buy their homes from them. Until then, most housing equity will just be a rather large number on a page or screen.

Q Annual growth was higher in the regions outside of London for the first time in five years. Is this statistic significant?

A London has seen strong house price growth in recent years and increasingly stretched affordability. Thanks to this and a widening gap compared to prices in the rest of the country, increasing numbers of buyers are either choosing or being forced to look outside London for a home. This has driven stronger price growth and hence led to rising values in the south of England.

This marks the next stage of the housing market cycle where price growth spreads across the country in relation to underlying economic activity and wage growth. Quite how far this cycle can stretch will be heavily dependent on the future direction of mortgage rates.

^{Source: Savills Research}

Q With over £1.3 trillion of outstanding debt, how exposed is the housing market to rising interest rates?

A While the overall nominal value of debt secured against homes is substantial, the aggregate ratio of debt to household income has fallen from its peak in 2008 and the average loan-to-value ratio for the housing market is only 21%.

Even just accounting for mortgaged homeowners, who hold the majority of the debt, only brings the loan-to-value ratio up to around 45% and mortgage repayments are around 20% of income, in line with historically affordable levels. This suggests that, on average, there is plenty of capacity to cope with rising interest rates.

However, with mortgaged homeownership in decline and new buyers taking out record high loans relative to their income, mortgage debt is becoming more concentrated amongst fewer people.

Borrowers with larger loan-to-income ratios may struggle in the event of a sizeable mortgage rate rise and there is still a significant number of households that would struggle with a 1% increase in mortgage rates. Then again, that prospect appears to be getting pushed further into the future.

_{For more UK housing market analysis, you can follow Neal Hudson on Twitter @resi_analyst}