New figures have revealed that first-time buyers have to earn a whopping £16,000 more than the average household to get on the property ladder.
According to the government’s English Housing Survey, the average income of first-time buyers was far higher than the income of the average household in 2014-15.
First-time buyers had an average yearly income of £43,000, compared to £27,000 for the average household.
Campbell Robb, Shelter’s chief executive, said: “These figures are a glaring reminder that this country’s drastic shortage of genuinely affordable homes means for millions finding a place to call their own is fast becoming out of reach.
“Instead more and more people on ordinary incomes have no choice but to face a lifetime of expensive, unstable private renting, unless they’re lucky enough to have help from friends and family.
“The new government has a real chance to ease the pressure on young people and families in these uncertain times by making housing a top priority, and bringing forward measures to quickly start building homes that people on ordinary incomes can actually afford to rent or buy.”
The survey also found that the proportion of homebuyers that are single has halved in the past 20 years.
Soaring house prices and deposits have increasingly difficult for people not in a couple to buy without two incomes.
In 2014-15 a massive 80% of all first-time buyers were couple households – an increase from 62% ten years ago.
The number of first-time buyers has also fallen in the last decade by about 300,000 to 564,000, despite an increase in the number of households during the same period.
Richard Connolly, chief executive officer at Rentplus, said: “It is shocking that the number of first-time buyers has plummeted by 300,000 over the last 10 years. This, combined with the fact that David Cameron’s government produced the fewest houses of any government since 1923, throws into stark relief the dual crises of lack of housing supply and affordability in the UK.”
Housing crisis
The number of people stuck in private renting also continues to grow. In 2014-15, 19% of all households were private renters – a total of 4.3 million households – up from 11% of households who were renting privately a decade ago.
In 2015, the government set the UK house building target by pledging to build one million homes over its five-year term. However, only 142,890 homes were built in 2015, 29% less than the 200,000 homes needed reach the one million target by 2020.
There are fears that first-time buyers are being squeezed out of the market due to the dwindling supply of suitable homes and ballooning property prices.
According to the latest Nationwide House Price Index, house prices rose 0.2% in June to £204,968.
Tougher affordability checks from lenders and rising house prices have also made it increasingly difficult for first-time buyers with smaller deposits to get on the property ladder.
Low interest rates combined with the economic recovery have done little to reduce the need for rented housing, while house price inflation ahead of wage growth has pushed property prices out of reach for many.
Connolly said: “It is people at higher income levels, or are in the position to be able to borrow money from friends and family, who are able to purchase a home. Many are not as lucky. Lack of a deposit remains the main barrier to purchasing – this was cited by two third of renters who do not expect to buy and, more generally, fewer private renters expect to be able to buy a home, according to today’s findings.
“The recent news that millennials, aged between 15 and 35, may be the first to earn less than their parents’ generation means that affordable housing models are now more important than ever for democratising home ownership.”
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