Nick Churton of Mayfair International Realty, the London-based affiliate of Houlihan Lawrence, comments on how the continued reticence of the banks to offer sensible mortgages – other than to those with large deposits – may risk changing the way many look at property ownership.

It is a truth universally acknowledged, that a single family in possession of a good mortgage must be in want of a house. Thus a Jane Austen novel on the property market could have begun.

Sadly today there are plenty of families on both sides of the Atlantic wanting a home, especially with affordability at near-record levels, but many can not get hold of a mortgage.

Austen knew a thing or two about property, or at least the importance of owning it. Her novels had much to do with its acquisition. Although her heroines tended towards marriage as a route to ownership, she would have understood about financing a property purchase through borrowing, as her life coincided in the UK with the advent of mutual building societies.

Austen understood that social status played a major role in owning or aspiring to own property. Above all perhaps, she understood that an individual’s or family’s financial circumstances played a pivotal role in determining where and how one lived – and how one was seen to live. She certainly knew the value of a fine location and the benefits that well-proportioned rooms and good natural light bestowed upon occupants.

This understanding seems as apt today as it was when Jane Austen was alive in the late eighteenth and early nineteenth centuries. The desire to house one’s self and/or one’s family comfortably, and the pleasure that a well-designed house gives to its owner – both socially and materially – seem largely unaltered.
But two things have changed. Residential property no longer just demonstrates wealth but also creates it, and thus makes it even more desirable. Also, as far as the UK is concerned, most of the building societies, who traditionally did the lion’s share of the mortgage lending have now been demutualised and swallowed up by large banks. These are not much in the lending mood at the moment. So, with no other way of obtaining a mortgage this is altering the way many must think about owning property. In 2011 this means that, unless the UK government and the banks take urgent steps to reverse the situation, for the first time in over two hundred years it will only be the already well-off who can realistically afford to buy property.

Non-profit-making mutual building societies were created to allow their members to buy property. Banks were created to make money for their shareholders. Building societies were prudent and fiscally responsible. Banks clearly haven’t been, and are a perfect example of pride coming before a fall. To extract themselves from the trouble they are in the banks are now prejudiced against the very people the building societies were formed to assist. Jane Austen could have written a book about it.