We are becoming a nation of renters

The decline in the rate of homeownership seen over the past decade in this country looks set to continue as a consequence of the housing shortage which is pushing house prices out of reach.

With salaries failing to keep up with rising property prices, fewer people are destined to become homeowners and as a result demand for accommodation in the private rented sector will continue to grow; an attractive proposition for many buy-to-let investors.

The think tank Resolution Foundation point out that while the average price of a home in the UK has shot up to £291,504, based on data from the Office for National Statistics, it estimates that the average wage, at £24,300, is now just around 3% higher than it was when the credit crunch hit in 2007/2008.

Figures provided by the Resolution Foundation also show that low and middle income households are now spending 26% of their salaries on housing, compared to 18% back in 1995, making it even harder for those in rented accommodation to save enough money for a deposit to buy a property.

While much of generation X (1965-1981) and baby-boomers (1946-1964) have been fortunate enough to buy their own home, the think tank believes that many people born between 1982 and 2004 will simply be forced to rent for longer.

One-third of homeowners are now aged 64-plus, up from a quarter in 2000. In contrast, 16-34 year olds account for just 10% of property owners, down from 19% in 1998.

In London, where property prices are highest, the PwC estimates that 40% of people living in the city will own property by 2025, down from 60% in 2000. It is here that the Resolution Foundation forecasts that people will find it hardest to buy property.

The think tank says that where more than half of under-35s on low to middle incomes owned their own place in 2000, today it is just a quarter. It is likely to be approaching 10% by 2025, and more like 5% in London.

Fewer people saving

A separate report by Halifax, released in April, stated that fewer young people are saving towards a deposit as high property prices and low wages deter them from even attempting to get a foot on the housing ladder.

The proportion of people aged between 20 and 45 putting money aside to buy a house has dropped from 57% in 2015 to just 43% this year, according to the mortgage provider's latest Generation Rent report.

If this pattern continues then it suggests that over the long-term, homeownership levels in the UK will continue to fall.

Craig McKinlay, mortgages director at Halifax, said: “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.

“The 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.”

The report obtained information from over 40,000 20 to 45-year-olds and 4,000 parents with children aged between 20 and 45.

Commenting on the report, Roger Harding of housing and homelessness charity Shelter, said: "For the first time in decades, young people today are facing worse prospects than their parents because successive governments have ducked the question of how to fix the housing shortage.

"House prices have now shot up to ten times the average wage, leaving ‘generation rent’ left with two alternatives - either carry on living with mum and dad, or pay out dead money to landlords."