80% of under 30s need help to buy a home
Share
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.”
- Previous Page
- 1
- 2
- Next Page
View results 10 per page | 20 per page
Readers' comments (13)
Anonymous | 4 Mar 2010 10:27 am
I not sure that Maggies was a home ownership dream - more if people have mortgages less likely to strike.
As to home ownership, easy if you were given 65%-70% off the price.
Expectations are different now - 20 - 30 years ago, most expected to save and put in a substantial deposit.
We have too many people in this country for the size of it, particularly in the south east.
If property prices remain static then more people will be happy to rent and not see property as an easy way to make money.
Unsuitable or offensive? Report this comment
Jon | 4 Mar 2010 11:46 am
This is a major issue. It puts the Chilean earthquake into perspective. Lets be thankfull prices don't crash around our ears like property in that devistated part of the world.
Unsuitable or offensive? Report this comment
Anonymous | 4 Mar 2010 1:55 pm
A lot of interesting comments but Chris is right in most of what he says. I've been in this industry since 1076 and I've been through a few of these "first time buyers" will never get on the property ladder but somehow that nevers seems to be the case. The current crisis has one major issue inasmuch as indemnifiers have disappeared and it is hard to do high LTV loans without the additional collateral. let's be honest - any lender would be stupid to risk the level of potential loss in such an unpredictable market. Notwithstanding this, however, it is true that buyer expectations are sometimes far too high. When I bought my first house I had to save my deposit with the lender and my 10% deposit was the equivalent of a years net income. I was offered the only product available - standard variable rate and fees were high. The interest rate was 13.5% and we struggled like mad to survive. We had secondhand furniture and old B&W Tv and built up our household as we could afford it. No credit cards and consumer borrowing was strictly regulated. We managed (just) and to be honest, in real terms the level of my mortgage payment to my income was probably higher than it would be for most FTB's now. If youngsters want t get on the housing ladder they need to forego a new car, spend less on socialising and start saving.
Unsuitable or offensive? Report this comment