A survey by Close Brothers into the financial wellbeing of UK employees found homeownership was an aspiration of 65% of those in work but when it came to the reality, people were thwarted by challenges.
Indeed, the Financial Wellbeing Index discovered 47% of non-homeowners didn’t think they would ever be able to afford to get onto the property ladder.
Meanwhile a quarter of UK employees were spending more than half their monthly income on housing costs, and 10% were spending over 70% of their wages.
And one in eight felt their housing costs are unaffordable – a figure which rises to 19% for millennials.
Jeanette Makings, head of financial education at Close Brothers, said there was clearly a gap between perception and reality when it came to housing amongst employees.
“While there’s confidence around affordability,” she said, “a huge proportion of people’s salaries are going on housing costs. This makes saving for the future more difficult and contributes to the scale of uncertainty when it comes to taking the first step on the property ladder.”
Opportunity
Close Brothers said the age that people had become homeowners had been pushed back by at least eight years since 1997 because of ‘skyrocketing’ house prices over that time.
However, it felt there might be hope for some potential first-time buyers because house price growth was at its lowest annual rate since September 2012.
If growth continued to stagnate while wages improved, it said, homeownership could become more a ‘more feasible’ ambition.
Importance of saving
It also highlighted the importance of forward thinking, pointing out that to successfully save for a property employees must have a financial plan in place. With four in ten employees saying they didn’t know where to start when it came to getting onto the housing ladder, Close Brothers said it was important they were offered the right advice to help them achieve their long-term saving goals.
Professor Sir Cary Cooper, a leading expert in workplace wellbeing from the ALLIANCE Manchester Business School, University of Manchester said: “Shelter is an absolute necessity and being worried about housing affordability can unsurprisingly damage a person’s wellbeing regardless of whether they’re at home or work.
“Whether it be paying the rent, taking the leap as a first-time buyer, or the impact of a variable interest rate in times of economic uncertainty, it’s vital that employees are comfortable and confident in how to approach their finances when it comes to housing.”
