Young people remain pessimistic about their chances of getting on the property ladder, with only a third prepared to save for a deposit for more than three years before abandoning their plans, according to the third annual Generation Rent report from Halifax.
With the average deposit paid by first-time buyers in the first quarter of the year at £26,956, the latest report reveals the ongoing struggle to take the first step onto the property ladder. However, the report finds the issues currently facing those looking to get onto the property ladder are such that there is a danger of splitting the UK in two: between those who can and cannot afford to buy a home.
Key highlights from the report include:
- 71 per cent of 20-45 year olds anticipate that country is in danger of being divided by social and economic differences between homeowners and non-homeowners.
- Over half (52 per cent) predict Britain will become a nation of renters within the next generation.
- One in three (31 per cent) are only prepared to save for three years to build up the deposit on their first home.
- A fifth (21 per cent) of non-homeowners aged 20-45 have already given up on the prospect of owning a property – this rises to 43 per cent among 40-45 year olds.
- 57 per cent of non-homeowners are concerned they will be unable to retire if they have to rent all their life. A similar proportion believe people can never feel fully settled in rented property.
- 47 per cent think it is important for parents to bring up children in a home that they own, not rent.
- The Bank of Mum and Dad remain heavily burdened; with nearly a third (30 per cent) concerned the support they have provided may affect their own financial future.
- 29 per cent of 20-45 year olds who don’t own their home and have no plans to get on the property ladder.
Commenting, 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. 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.”
Giving up the dream – the three-year itch
Almost a third (31 per cent) of 20-45 year olds said that they would only be prepared to save for three years to raise the necessary house purchase deposit. However, with the average first-time buyer deposit paid in the UK £26,956, more than a third (35 per cent) say that they currently cannot afford to save anything and admit they are reliant on a windfall, bonus or anearly inheritance to get the necessary deposit. Just 15 per cent feel they are able to put aside more than £50 a month towards a deposit.
As a result of the documented issues surrounding deposits, just 16 per cent have a realistic plan to buy a home within the next three to five years.
Homeownership remains key aspiration
Two thirds (66 per cent) of young people believe that buying a house means people are more settled in their environment – a fact potentially exacerbated by the UK norm of relatively short rental agreements of six months. Indeed, the impact on personal and family life also continues to drive ownership aspirations. Nearly half (47 per cent) feel it is important for parents to start a family in a home that they own rather than rent, and longer term, 57 per cent fear that without a foothold on the property ladder they will be unable to retire.
The Government, the Bank, and Mum and Dad
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 per cent) do not know if they will help.
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