Rental demand to stay high as first time buyers hit obstacles

New research by consumer group HomeOwners Alliance shows that for many young people, homeownership has become an impossible dream.

A sentiment survey by the group suggests that some 1.9m aspiring homeowners do not think they will follow in the footsteps of their home owning parents.

Three quarters say their parents owned their home, but only 48 per cent expect to own themselves.

The research reveals that most homeowners follow in the footsteps of their home owning parents - 81 per cent of current homeowners - suggesting that as homeownership declines so do the prospects of future generations to own.

The majority (71 per cent) of respondents who do not own their home, aspire to do so in the future. But more than half (52 per cent) do not think they will ever be able to.

Main reasons for not owning include high house prices (60 per cent), saving for a deposit (44 per cent), ability to afford monthly mortgage repayments (33 per cent) and the ability to get approved for a mortgage (31 per cent).

Meanwhile some 28 per cent of younger homeowners rely on government schemes in order to afford a home. In addition 30-plus year mortgage terms are becoming the norm with 38 per cent of homeowners aged 18-34 having a term of 30 years or more.

Commenting on the findings, HOA chief executive Paula Higgins says: “The government has failed aspiring homeowners, and continues to degrade the life chances of young people by continually not building enough homes. This shortage of new homes has led to rocketing house prices, leaving aspiring homeowners dependent on Mum and Dad to bolster savings or by locking themselves into longer term mortgages which cost them more in the long run.

“While over a decade of low mortgage rates helped the over 35s to buy a place, in today’s broken Britain, homeowners rely on government schemes to get them out of this mess and bridge the affordability gap - except the government’s flagship Help to Buy programme has ended with nothing to fill the void.

“So here we are, at a tipping point. Four million of the 7.5m aspiring homeowners in the UK don’t think they will ever be able to own their home. And almost two million don’t think they will follow in the footsteps of their home owning parents. We know that the fewer people that own, the worse the prospects of homeownership are for their children.

“With the upcoming election a key issue will be how the parties plan to build more homes and provide much needed support to first time buyers.”