Almost two million young people have been locked out of the housing market since 2001, according to a new report from the Social Market Foundation.
The study found that that if homeownership rates among 25 to 34 year-olds were the same as in 2001, an additional 1.8 million young people would be homeowners in England.
These young people have failed to get a foot on the property ladder due to high house prices, stricter lending criteria and the difficulty of saving for a deposit in a low-interest environment.
The latest figures from Nationwide show that the average price of a property in the UK has risen to £196,829.
The Social Market Foundation suggested that property crowdfunding could offer a way to help more people onto the housing ladder, while also providing much needed investment in housebuilding.
The report highlighted insufficient housing supply as the key underlying factor. The UK will face a shortfall of almost 1.3 million homes by 2026 as a result of increasing demand and inadequate supply growth, which push up house prices even further.
The Foundation warned that if supply continues to fall short while demand continues to rise, homes will become ever more unaffordable.
The author of the report, SMF economist Katie Evans, said: “Getting onto the housing ladder is becoming harder and harder for young people. Our failure to build enough homes means this problem threatens to stretch into the future.”
“Property crowdfunding could be the means to tackle both demand and supply, by helping more young people to become homeowners, whilst directing additional investment to small and medium-sized house builders.”
Property crowdfunding allows would-be investors to a share of a property through online platforms. Although in its early stages in this country, the dramatic growth of alternative finance in the UK and the huge expansion of real estate crowdfunding in the USA – which has hit $1 billion – suggest potential for significant growth in the years ahead.
Founder and CEO of Property Partner, Daniel Gandesha, said: “The solution to the UK’s housing crisis must be innovation. There’s no time to waste. Young people need affordable access to the market. Housebuilding needs to double to meet demand. It’s time to put options like property crowdfunding on the table as part of the answer.”
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