The number of homeowners is set to plummet by almost two million people by 2025, says a report by the Smith Institute.
The think-tank says if the current state of decline continues, only 15.5 million households will be in owner occupation. It warns that allowing house prices to fall to combat the downward trend would lead to a dramatic increase in negative equity.
The study finds that a range of factors are eroding potential homebuyers’ ability to own a home. As a result of the banking crisis borrowers face much tougher requirements, further moving mortgage finance out of reach.
The move towards greater job flexibility and the lack of “jobs for life” means that a declining number are able to put down roots as they have to increasingly move due to the availability of work. Future first time buyers are also facing obstacles such as increased debt caused by rising student fees, dissuading them from aiming for homeownership.
As a result of the findings, social landlord Genesis Housing Association, is of the view that housing associations should look outside of their core customer base to help the growing numbers that are being pushed into the private rental sector.
It says housing associations should open up the types of tenure they offer to help find the right solution for the new wave of private renters.
Neil Hadden, chief executive of Genesis, says: “The Thatcherite vision of everyone owning a home is no longer relevant today. This report has found that a significant number of people face the prospect of no longer being able to buy a home; the government and all political parties need to change their language and stop promoting home ownership.
“Housing providers like Genesis need to step in to help find solutions that are right for these market renters. We no longer live in a world where one size fits all and we need to look towards a mixture of solutions depending on individual household circumstances.”