Angharad Paget-Jones, from Port Talbot, Wales, don’t expect to ever get on the housing ladder. Despite some money-saving advice and guides on the Internet, “it’s not as easy as stopping your morning coffee or canceling your Netflix subscription,” she says. Paget-Jones, 28, needs a house of his own to live in. As someone with a disability, she has to make hard adjustments to her property to improve her quality of life, but she can’t do that in the rental market.
“Having my own house is the goal,” she says. But despite working full time, she hasn’t been able to save enough to make a down payment. The average price of homes she has looked at is around £180,000 ($235,000). She has about £3,000 ($3,900) in savings, while her rent is £675 a month. She can save around £200 a month, but the increased cost of living has hit her hard. “I’m saving a lot more than most people, I get that, but with everything else going up, it’s not possible to save more than that while I can heat my house and eat,” she says.
Paget-Jones’s situation is far from unique. House prices are 4.4 times the median disposable income in the United States – the highest level since 2006. In England and Wales it is 8.9 times, compared to 6.7 times a decade ago. Canada is considering banning foreigners from buying homes in the country after the median home price rises to nine times the median household income. The housing market is broken, more people are left in an endless cycle of rental housing because they can’t afford to get a foot on the housing ladder.
This problem is exacerbated by the fact that, after years of low interest rates, those who have the money to invest are choosing real estate over bank accounts, leaving the rest for their income to rent, rather than saving to buy a home.
“Reasonably low global interest rates have pushed house prices around the world,” said Dan Wilson Craw, deputy director of Generation Rent, a British lobby group campaigning for tenants’ rights.
“Housing is not housing”, agrees Richard Ronald, professor of housing and chair of political and economic geography at the University of Amsterdam. “Housing is an investment asset. It’s a pension.”
It is a problem that countries around the world have recognized, and many are trying to fix it. “There’s quite a similarity that the supply-demand relationship is very, very imbalanced,” said Remy Raisner, founder of New York’s real estate investment firm Raisner Group and co-author of a World Economic Forum report on the global housing crisis. In the United States, housing production has declined by about 3 million homes per decade this century.
Some suggest that Japan is the model to follow. There the rents have remained largely the same for the past 25 years, according to data from the country’s statistical office. The reason is that the government controls zoning plans at the national level and is more open to development in the number of houses that are allowed to be built. Just over a third of Japanese citizens rent the homes they live in, protected by a 1991 law, the Land and Building Leases Act, which makes it difficult for landlords to terminate leases or prevent a tenant from renewing their lease. .
