A growing number of young people have given up on the idea of buying their own home, reinforcing signs that property ownership could cease to be the norm for the next generation.
The picture is particularly acute in London, where 82 per cent of 20 to 45-year-olds say they will never be able to buy a property, according to research from the Halifax.
The report found that the proportion of people saving for a deposit has dropped by six percentage points over the past year to 43 per cent and argues Britain is “seeing the emergence of a new demographic split between those who want to get on the ladder and those who say they don’t”.
“The presumption that the UK is obsessed with home ownership may need revaluating and a lower level of home ownership may become the new normal,” it adds.
The rise in house prices, which has allowed older generations to lock in sizeable gains, is one of the key factors behind the dramatic generational changes over the past decade. Briton’s young adults, who for much of the 20th century enjoyed living standards well above average, have slipped behind well-off pensioners.
Concern about the prospects for first-time buyers is one of the main themes of the general election campaign. Labour has pledged that if it wins it will introduce a Future Homes Fund to enable the construction of 25,000 homes a year over the next five years, while George Osborne, the chancellor, used his last Budget of the parliament to announce a subsidy for first-time buyers equivalent to an extra £50 for every £200 they save.
Seb Klier, policy manager of Generation Rent, a campaign group focused on improving standards in private rental accommodation, said it was “no wonder” that renters were giving up on the prospect of buying a home.
“This wouldn’t be a problem if renting was a legitimate alternative to home ownership, but it is expensive, insecure and often of poor quality. Not only do we need to build more houses, but renters desperately need a lettings market that treats them as customers rather than cash cows for landlords,” he said.
Craig McKinlay, mortgages director at Halifax, said he was concerned about a “disconnect” between reality and perception, with a fifth of young people surveyed believing it was “virtually impossible” for first-time buyers to get a mortgage, despite there being a notable increase in the number of high loan-to-value products available.
The research is based on interviews with more than 40,000 20 to 45-year-olds over the past five years and more than 4,000 parents of that age group over the past four years.
– (The Financial Times Limited 2015)
