Why is Generation Rent now losing hope of ever getting on the property ladder when the number of first-time buyers in 2014 rose to its highest level in seven years?
Mortgage lender Halifax estimates that 326,500 people bought their first home last year – a rise of 22% compared with 2013.
But new research by the home loans provider reveals the proportion of people aged between 20 and 45 putting money aside to buy their first home has dropped from 57% last year to 43% this year.
At the same time, 16% of young people now claim they do not want to get on to the housing ladder, compared with 13% in 2011.
The latest Generation Rent report by Halifax says there is a growing disconnect between first-time buyers’ perception of the property market and the reality.
The mortgage lender questioned 40,000 people aged between 20 and 45 who have yet to buy their first home about what they thought was the main obstacle to home ownership. A total of 57% said it was the size of the deposit they need, 56% think it is high property prices and 53% blame low incomes.
In London, only 39% of people aged between 20 and 45 own a property. And most believe their only reason for hiring the services of a moving company will be to switch rental address, with 82% believing they will never be able to buy a house.
Craig McKinlay, mortgages director at Halifax, commented: “While there has been an increase in first-time buyers in the last 12 months, at the same time there is also a growing group of young people who believe they won’t be able to get a mortgage.
“This difference between the reality and their perception needs to be addressed urgently if we are to prevent people from giving up on getting on the housing ladder. We can educate people about the mortgages that are available to them, but there is still the underlying issue of needing to build more affordable homes.”
Conservative politician Stephen Greenhalgh, the Deputy Mayor for Policing and Crime in London who is bidding to become the Tory candidate for Mayor of London in May, says: “In our capital city, more people rent privately than own their home either outright or with a mortgage. We are currently set on a course where more Londoners will rent privately than own their own homes within the next five to ten years.
“With around 750,000 Londoners in social rented housing, the percentage of home owners has already collapsed from two-thirds of London households to less than half.”
He echoed Prime Minister David Cameron’s comments that owning your own home is the most natural instinct in the world, and pointed out that schemes such as Help to Buy could help Generation Rent.
The Halifax research backed this view. The lender found 79% of 20 to 45-year-olds believed banks do not want to lend to first-time buyers, and 21% believe it is virtually impossible for first-time buyers to obtain a mortgage. However, more than half of those surveyed said Help to Buy has had a positive impact on the market and could help first-time buyers fulfil their property owning dreams.
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