Global Consumer Attitudes to Home Ownership: In Search of a Room of One’s Own

EXECUTIVE SUMMARY

Demand factors

Consumer market trends

Key market trends

Outlook

Summary 1 Consumer Attitudes to Home Ownership: Opportunities and Challenges

DEMAND FACTORS

Shrinking Household Size Boosts Demand for Housing

Table 1 Average Age of Men at First Marriage – Selected Countries 2000/2014
Table 2 Average Age of Women at First Marriage – Selected Countries 2000/2014
20-somethings increasingly put family life on hold
Chart 1 Average Age of Women at First Childbirth – Selected Countries 2000/2014
Fertility rates have also been falling
Table 3 Fertility Rates – Selected Countries 2000/2014
More divorcees and retirees
Chart 2 Growth in Population and Number of Households – Selected Countries 2000/2014
Stuck in the nest

Youthful Populations Put Pressure on Middle Eastern Housing Supply

Young Saudis “stuck in their parents’ homes”
Mortgage market remains stunted
Chart 3 Gross Mortgage Lending – Jordan, Kuwait and Saudi Arabia 2009-2014

Tales of the City

Chart 4 Urban Population in China, India, Indonesia and Japan 2009/2014
Chart 5 Urbanisation in China, India, Indonesia and Japan 2009/2014
Table 4 Rural Population in China, India, Indonesia and Japan 2009/2014
Table 5 Population Growth – China’s Four Largest Cities 2009/2014
Overcrowding pushes up rents
Population pressure in surprising places

House Prices are Headline News

In search of the “feel good factor”
The great stagnation
Chart 6 Consumer Expenditure on Housing as a Proportion of Overall Consumer Expenditure in Selected Countries 1999/2009/2014
Table 6 Consumer Expenditure on Housing as a Proportion of Overall Consumer Expenditure by Region 1999/2009/2014
The dream that refused to die
Table 7 Age When Consumers Typically Become Home Owners 2015 – Emerging and Developed Markets

The Tricky, and Sticky Economics of Housing

Chart 7 Gross Mortgage Lending – Germany and Spain 2004-2014
Chart 8 House Price Indices – Germany and Spain 2007-2014
Financial engineering backfires
The stickiness problem
Table 8 Housing Completions – Ireland and Spain 2000-2014
Chart 9 House Price Index – Ireland 2000-2014
Chart 10 Housing Completions – Germany, Spain and the UK 2000/2006/2014
Table 9 Population Density – Selected Countries 2014
It’s the inventory stupid!
The largest bang of all?
Chart 11 Housing Completions – China 2000-2014
Chart 12 House Price Index – China 2003-2013

A Helping Hand from Government

Table 10 Proportion of Households Living in Owner-Occupied Housing – Selected Countries 2014
Table 11 Proportion of Households Living in Owner-Occupied Housing – US and UK 2009-2014
Perceptions of inflation – why housing is different
Chart 13 House Price Index – US 2003-2014
Mortgages as a savings vehicle
Help to Buy scheme causes controversy in the UK
The Green Belt becomes a planning battleground
Insiders versus outsiders
Build up or out?

Is Rent Really “Dead” Money?

Table 12 Perceptions of Renting 2015 – Emerging and Developed Markets
The ghost of negative equity
Tenancy law is crucial
Table 13 Home Ownership as a Priority 2015 – Emerging and Developed Markets
Changing attitudes among millennials?

The Rise of Global Cities

Wealthy Russians flock to “Londongrad”
And for the somewhat less affluent – Bulgaria
Hurray for Hollywood!
But some locals lose out
Table 14 Availability of Affordable Housing 2015 – Emerging and Developed Markets
Some cities fight back against gentrification

Shrinking Home Sizes

Small is beautiful?
The value of experience
McMansions make a comeback in the US?
Chart 14 Households by Number of Rooms in the US 2009-2014

Remittances Flow into Bricks and Mortar

Table 15 Remittance Inflows in Selected Countries 2009/2014
Home is where the heart is
Table 16 Real GDP Growth and House Prices in Poland 2008-2013
Irish migrants keeping up mortgage payments at home

Technology and social atomisation drive “super cocooning”

“I think we are looking for protection”
Terrorism fears keep affluent Kenyans at home
Some millennials opt for communal living
Cohousing aims to cross the generational divide

CONSUMER MARKET TRENDS

Home Security a Priority in Insecure Places

Chart 15 Deaths from Assault in Selected Countries 2014
The enemy at the gates
Chart 16 Gini Index in Selected Countries 2014
Scepticism in Europe
Smart home technology set to disrupt the market?

Consumer Appliance Demand Heavily Dependent on Housing Market

Chart 17 Volume Sales of Major Appliances in the US 2003-2014
Shrinking households and smaller homes mean smaller appliances
Demand for air purifiers soars as China urbanises
Chart 18 Volume Sales of Air Purifiers in China 2009-2014

Consumer Electronics Sales Boosted by Cocooning

Chart 19 Volume Sales of Tablet Computers, Digital TVs and Smartphones in the US 2008-2013
As TVs get bigger and sharper, “super” cocooning emerges
Table 17 Possession of Broadband Internet Enabled Computer in Selected Countries 2009/2014
Chart 20 Annual Cinema Trips in Selected Countries 2009/2014
Pay-TV now regarded as a necessity by many in Ireland
Chart 21 Possession of Cable TV or Satellite TV System in the US, Ireland and Spain 2009-2014

Some Do More with Less in the Garden

Growing number of tenants bad news for UK gardening market
Chart 22 Gardening Value Sales in Germany and the UK 2008-2013
Gardens shrink as lot sizes contact in Australia
Back to basics in Spain
In search of clean air in China

Varying attitudes to manual work impact home improvement

Chart 23 Global Value Home Improvement Sales 2008-2013
House prices a key component of demand
Chart 24 Consumer Expenditure on Home Improvement and House Price Index in the US 2000-2014
Renters evince a lack of interest in DIY in the UK
Every man should build a house
Do it for me!

Home Furnishings Sales Sensitive to Shifts in Housing Values

Chart 25 Consumer Expenditure on Home Furnishings and House Price Index in China 2002-2014
Chart 26 Consumer Expenditure on Home Furnishings and House Price Index in the Netherlands 2003-2013
Shrinking home size helps to squeeze demand for furniture in Japan
Chart 27 Value Sales of Home Furnishings in Japan 2008-2013
Falling rate of home ownership undermines consumer demand for furniture in the UK
Table 18 Households by Tenure in the UK 2009-2014

Equity release bolsters purchasing power

Downsizing as an alternative

Housing Goes Green

Shift to renewables pushes up electricity costs in some countries
Chart 28 Per Household Consumer Expenditure on Electricity 2009-2014
Governments push renewables, households reduce electricity consumption
Global energy deflation
Going off the grid in emerging markets
Chart 29 Proportion of Households with Electric Lighting in Selected African Countries 2014
Carrots and sticks

KEY MARKET TRENDS

Brazil

Chart 30 Brazilian House Price Index 2004-2014
Table 19 Brazil’s Housing Stock 2009-2014
Increases in life expectancy and number of divorcees fuel growth in smaller households
Chart 31 Households by Number of Persons in Brazil 2009/2014
An underdeveloped mortgage market
Chart 32 Households by Tenure in Brazil 2009/2014
Table 20 Real Gross Mortgage Lending in Selected Countries 2009/2014
Bringing favelas in the formal housing market
Government promotes home ownership to stimulate economic growth
Sales of appliances and home furnishings boom
Table 21 Volume Sales of Major Appliances in Brazil 2009-2014
Consumers invest in energy efficiency and green energy
Feeling the strain

China

Chart 33 Real GDP Growth in China 2004-2014
Unprecedented urbanisation
Table 22 Population of China’s Five Largest Cities 2009/2014
Household size shrinks
Chart 34 Households by Number of Persons in China 2000/2014
Surge in Construction Activity and Housing Values
Chart 35 Housing Completions in China 2009-2014
Chart 36 Chinese House Price Index 2009-2014
“DIY is for migrant workers”
Too much of a good thing?
A dangerous intersection of politics and economics
Debt worries mount, as the government struggles to reorient the economy
Demographics darken the longer term outlook

Germany

Chart 37 Per Capita Mortgage Debt (Outstanding Balance) in Selected Western European Countries 2014
Renting an affordable and stable option
Tenants buy their own furniture and appliances
Table 23 Value Sales of Gardening and Home Furnishings in Germany 2008-2013
Housing equity relatively unimportant as a demand driver
Chart 38 Savings Ratio in Selected Western European Countries 2014
Table 24 Savings Ratio in Germany 1990-2014
Cheap money fuels property investment
Chart 39 German House Price Index 2006-2014
In spite of quantitative easing, a housing bubble is unlikely
Table 25 Gross Mortgage Lending in Germany 2009-2014

Spain

Housing Pain Lingers
Construction binge leaves a nasty hangover
Chart 40 House Price Index in Spain 2007-2014
Chart 41 Housing Completions in Spain 2004-2014
A legacy of ghost towns and negative equity
Public housing sold off as regional governments struggle to balance the books
Staying close to home
Chart 42 Share of Young Adults Living with their Parents in Selected Western European Countries 2013
Hard-hit youngsters seek to cut back and consume creatively
Housing woes lead to consumption crunch
Chart 43 Consumer Expenditure in Spain 2007-2014
Table 26 Value Sales of Gardening and Home Improvement in Spain 2008-2013
Chart 44 Savings Ratio in Spain 2007-2014

UK

Rising Prices Leave “Generation Rent” Stranded
Chart 45 Savings Ratio in the UK 2009-2014
Safe as houses?
Table 27 Housing Completions in the UK 2009-2014
Government provides a helping hand to first-time buyers
Renting is the new normal for many young adults
Table 28 Households by Tenure in the UK 2009-2014
Chart 46 Growth in Real Value Sales of Home Furnishings in the UK 2002-2013
Requiem for a dream?

US

Home equity a key factor in US consumer confidence
The last refuge of a struggling middle class?
Chart 47 Gini Index in Brazil, Thailand and the US 2009-2014
Housing as saving
Chart 48 Savings Ratio in the US 1990-2014
Home equity rebounds

OUTLOOK

Cyclical Nature of Housing Market Key to Demand

How will China’s slowdown play out?
Chart 49 Growth in Real Value Sales in Selected Chinese Markets 2009-2018 (Actual and Forecast)
Chart 50 Growth in Volume Sales of Major Appliances in China and the World 2009-2019 (Actual and Forecast)
Table 29 Consumer Expenditure on Household Goods and Services as a Proportion of Overall Consumer Expenditure by Region 2014/2019
Can India be the new China?
Chart 51 GDP Growth Forecast for China and India 2014-2019
Table 30 India: House Price Index 2010-2013
Rebound in housing completions in North America and Western Europe
Table 31 Housing Completions in North America and Western Europe 2014-2019

House Prices and Consumer Demand May Become Even More Intertwined

Headline unemployment numbers do not tell the whole story
UK housing values and consumer confidence increasingly move in lockstep
Table 32 UK House Price Growth and Consumer Confidence Index 2012-2014
Chart 52 Consumer Expenditure on Housing as a Proportion of Overall Consumer Expenditure in Selected Countries 2014/2019
Table 33 Consumer Expenditure on Housing as a Proportion of Overall Consumer Expenditure by Region 2014/2019
Can the housing cycle be tamed?

The Next Wave of Urbanisation will be African

Table 34 Growth in the Number of Households by Region 2014-2030
Table 35 Urbanisation in Selected African Countries 2000/2014/2030
Creaking infrastructure could boost e-commerce
Rising house prices – a boon for some, a burden for others
Shifts in household structure likely to boost consumption
Table 36 Kenyan Homes by Number of Rooms 2000/2014
A vertical solution to Africa’s slums?

Ageing Populations Will Have a Profound Impact

Table 37 Median Age of Population in the Oldest Eight Countries 2014/2030 (Actual and Forecast)
Table 38 Median Age of Population in Selected Emerging Markets 2014/2030 (Actual and Forecast)
As public pensions come under strain, equity release could help to plug the gap
Increased migration will mean higher remittances

Generation Rent – Here to Stay or a Passing Fad?

Will Millennials buy into the American dream?
The dream that refuses to die
Young Britons face the prospect of being lifetime renters

Green Energy and Technology Change to Impact Housing Market

On the cusp of a solar revolution?
Greener homes will need less energy
Going off grid
Time for the iHome?

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