New research has revealed that it now takes 24 years for the average first-time buyer to save up enough money for a deposit to get on the property ladder.
According to think-tank the Resolution Foundation, if a low to middle income household were to start saving 5% of their disposable income a year now, they would not have a large enough deposit until 2039. This is in stark contrast to the 1990s when it took around three years.
The Foundation said that while 65% of people in the UK own a property, the home-ownership rate has fallen from 73% since 2007.
It said that decline has been driven by a sharp reduction in new buyers, with the proportion of households buying a home with a mortgage falling by a fifth since 2007 from 47% to 38%.
The study highlighted recent data from the Bank of England that found “significant” numbers of Britons were resigned to the prospect of never owning. The data showed that just under-half of the one-third of families who don’t already own their own home believe they’ll never do so.
Resolution said that with house prices outpacing earnings growth for most of the last 20 years, affordability had become a serious problem for younger families, with buying becoming a “distant dream for millions”.
The government has introduced a number of new schemes in recent years to help first-time buyers get on the property ladder, including Help to Buy programmes and Right to Buy extensions. In the recent Autumn Statement, Chancellor George Osborne also unveiled plans to build 400,000 homes and announced a 3% rise in stamp duty as part of the government’s aim to curb the buy-to-let sector.
Resolution’s chief economist, Matt Whittaker, said: “Indeed, to the extent that these schemes have stoked demand and so propped up house prices in recent years, they have served to make home-ownership even less attainable for many, while increasing the gains flowing to older home-owners who have been the main beneficiaries of the sustained housing boom – an important part of the growing generational divide identified by David Willetts and others.
“Increasing housing supply offers much more potential for dealing with the aspiration gap on housing. And the government took some welcome steps in this direction with its doubling of the housing budget at the Autumn Statement. Yet boosting supply is inevitably more difficult than supporting demand, with practical (housebuilders’ capacity) and political (voters’ resistance) barriers meaning that meeting the ambition of one million new homes by the end of the parliament is far from guaranteed.”
