That is the conclusion of a major study by mortgage lender Santander which said unless a change happens, homeownership in the UK is at risk of becoming the domain of only the wealthiest in the next decade.
It surveyed just over 5,000 non-homeowners aged between 18 and 40 and discovered that while 90% wanted to get onto the property ladder, two thirds of believed the dream of homeownership was already over.
Indeed, 64% thought homeownership would fall for future generations.
Santander has forecast just a quarter of under-34s would therefore achieve the goal of owning their own home by 2026 – this compares to half in 2006.
Radical changes needed
Santander is now calling for industry and the Government to think radically to find ways to ensure the homeownership dream is kept alive for future generations.
It wants new policy to be introduced which would help those without family support to raise a deposit. The bank also called for lenders to become more flexible when it came to borrowers’ affordability.
And it also recommended a stamp duty incentive for downsizers which would have the benefit of freeing up more homes.
Those surveyed also thought the Government should do more with many saying they would like to see the Help to Buy scheme extended beyond 2023, caps on rent prices and stamp duty cuts.
Wake-up call
Miguel Sard, managing director, Santander Mortgages, said its report should be a wake-up call for industry and the Government to think more creatively to keep the homeownership dream alive for the next generation of first-time buyers.
He added: “It’s clear that while the aspiration to own a home is just as strong as in previous generations, it’s a dream that is looking increasingly out of reach.
“Without change, homeownership in the UK is at risk of becoming the preserve of only the wealthiest young buyers over the next decade.
Barriers to homeownership
According to the study, the biggest challenge faced by first-time buyers was raising a deposit but many also struggled to get a mortgage based on their income.
Many also felt thwarted by house price increases as well as the level of student debt and the costs of childcare.
Santander said the average age of a first-time buyer had risen from 25 to 33 in the last two decade. Indeed, many new buyers were skipping the small property stage of housebuying and making their first purchase a three-bedroom house.
The survey also revealed 40% of first-time buyers were relying on an inheritance to boost their deposit and many were also underestimating the size of deposit they would need.
Two fifths of potential first-time buyers quizzed had saved nothing towards their first home, Santander revealed.
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