80% of under 30s need help to buy a home
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The Council of Mortgage Lenders estimates 80% of all under 30s now need financial help from a parent or relative to get on to the housing ladder.
The figure nudged up to 45% pre-credit crunch, but has now almost doubled.
The CML says the overall effect is that for those in the formerly typical first-time age bracket of 25-34, the likelihood of buying at the moment is around half its level of a decade ago.
The comments are made in its latest issue of News and Views, where it says a housing shortfall is also hampering the first-time buyer market.
It says the speed and intensity with which the characteristics of the typical first-time buyer have changed are stark.
It says: “What is most striking is that to get into the market, today’s first-time buyer is putting in a deposit of around £34,000, equivalent to more than their total gross annual household income.
“Only three years ago the deposit required to enter the market was a much more manageable – but still hefty – 37% of annual household income, at £12,700.”
It paints a bleak picture and says the effect of this is likely to be that first-time buyers will continue to face significant deposit challenges to enter the market, and that the trend of falling home-ownership that had already begun before the credit crunch will continue.
It adds: “There are very real questions about how to deliver a significant enough flow of housing in general, of whatever tenure, to meet the needs of the growing population.”
The CML believes private sector funding constraints and public sector spending cutbacks are likely to produce a significant shortfall in the supply of both housing finance, and housing itself, relative to the demand for it.
Between 1999 and 2009, the number of new homes built each year has ranged from around 130,000 to around 170,000. By contrast, it is now estimated that a range of 238,000 to 290,000 new homes are needed per year to meet housing needs.
It calls on lenders and the government to try and tackle the current housing shortfall.
The CML says: “The lending industry has a continuing significant role to play, as it always has had, in fostering the creativity and innovation that can devise new solutions to old problems. And there are many examples of this, as lenders continue to lend across the spectrum – to developers, to housing associations, to home-owners and to private landlords.
“But there is also a significant role for government, through both the planning system and other means, to help support conditions that will help the market eventually climb out of the housing shortfall that currently exists.”
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Readers' comments (13)
Chris | 2 Mar 2010 2:05 pm
I bought my first home when I was 27 - almost 40 years ago. It was so difficult to raise the deposit that I could not even afford a bed (bought one second hand), nor a mower to cut the lawn when I moved in.
Perhaps there is an issue with expectations here as well?
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Anonymous | 2 Mar 2010 3:34 pm
So what are you going to do about it? As a Broker who works in the 'affordable homes ' market . What new iniatives are coming to help this 80%? The Government have been very quiet recently , what do the CML plan??? It would be good to give the 80% some positive news for a change !!
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Mike C | 2 Mar 2010 4:01 pm
80% of under 30s can't afford a home - which is precisely why prices are falling at an annualised rate of 12%. In a couple of years 80% of under 30s will be able to afford a home, without any help - that's when the housing market will have bottomed.
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Bob Smith | 2 Mar 2010 4:11 pm
This is because houses are over priced. Wake-up CML, HOUSES ARE OVERPRICED!
When prices fall the 80% will be able to afford something until then they won't. This has nothing to do with supply of mortgages or housing and everything to do with PRICE!
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Anonymous | 2 Mar 2010 4:42 pm
There is no need for innovative solutions that will spawn yet another credit crisis, just a very very simple price drop. Just a matter of time.
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Andy R | 2 Mar 2010 4:52 pm
We need to do two things
1. Get the population down- let the emigrants exceed immigrants, as we don't have the jobs for everyone anyway
2. Get away from the crazy idea that a price increase is growth
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Awaiting the crash | 2 Mar 2010 5:09 pm
>Chris wrote...
>I bought my first home when I was 27 - almost 40
>years ago. It was so difficult to raise the
>deposit that I could not even afford a bed
>(bought one second hand), nor a mower to cut the
>lawn when I moved in.
>Perhaps there is an issue with expectations here
>as well?
Indeed there is!
What multiple of the average income did you have to pay for that house? Would you now be prepared to sell for the same multiple of today's average income? Or would you perhaps be prepared to sell it to me for the original sale price adjusted for inflation? No, I thought not. Both those figures are way below your irrational expectations.
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Anonymous | 2 Mar 2010 5:41 pm
Crash - Why dont you ask Chris what his interst rate was? Im pretty sure it will even out once that variable is added.
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ads | 2 Mar 2010 7:20 pm
Well said Chris. The issue as for as emigration is concerned is fairly bad. Many come here to work hard and improve their living, many of these will leave if Sterling keeps falling (already several of my economics alumni are leaving). Also you have the so called indigenous young (myself and girlfriend included) training for profession qualifications. When we're done if we can't afford something here we'll take our skills to a country with affordable property, somewhere where we can spend a portion of our income on other things. Having young people tie up all their earnings to cover a mortgage is insane. If they can't buy other things then shops, factories and offices close as demand falls (evidence in every high street).
A beautiful house in the USA costs a third (even after Sterling has fallen) of a UK one, in a similar position. It'll be bigger, have parking and garages (they love their cars). D.C. and New York are only a 6 hour flight away too.
Sort it out or watch the brain drain lift-off! :)
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Roger Ball | 2 Mar 2010 9:19 pm
Maggies home ownership dream one day closer to extinction then.
I hope our leaders have another tool in the box for motivating the masses.
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