Young people pessimistic about home ownership
The third annual Generation Rent report from Halifax third found that 71% of 20-45 year olds anticipate that the country is in danger of being divided by social and economic differences between homeowners and non-homeowners.
Over half (52%) predict Britain will become a nation of renters within the next generation as a third of young people are prepared to save for a deposit for more than three years before abandoning their plans.
Craig McKinlay, mortgages director at Halifax, said: “We are seeing a change in the social landscape of the UK, with a widening split between those who can and cannot afford to buy a home.
“Homeownership is clearly still an important goal for a lot of people, but fewer and fewer people consider it to be something they’ll be able to achieve.”
Worryingly a fifth (21%) of non-homeowners aged 20-45 have already given up on the prospect of owning a property – this rises to 43% among 40-45 year olds.
Some 57% of non-homeowners are also concerned they will be unable to retire if they have to rent all their life and a similar proportion believe people can never feel fully settled in rented property.
McKinlay said: “Renters say they never feel properly settled and fear they will struggle to retire, so the social impact of this shift is significant.
“More needs to be done to redress the balance, both through making homeownership more accessible and offering more stability through the rental sector.”
With the average deposit paid by first-time buyers in the first quarter of the year at £26,956 the struggle to take the first step onto the property ladder looks like it is far from abating.
The report also reveals a lack of understanding of the support available to first-time buyers through the government schemes such as NewBuy and Help to Buy.
While many welcome the schemes more than one in three (40%) do not know if they will help.
McKinlay said:“First-time buyers need to commit to making their dreams a reality – which might mean saving for more than three years.
“However there are now some very real options for people with smaller deposits. Teamed with substantial rate cuts in recent years now is a good time to be a first-time buyer.
“The new schemes have already helped to improve both mortgage accessibility and affordability, and at Halifax we approve 9 out of 10 mortgage applications from first-time buyers.
“It’s clear that the next step is to ensure potential buyers have all the information they need.”