The Resolution Foundation has reported today that home ownership in the UK is now at its lowest level for 30 years. From a peak of 71% in April 2003 it had fallen to just 64% in February this year, the same as in 1986.
What’s more, the figures show that the decrease isn’t just restricted to the over-heated property market in London and the South East. Greater Manchester has seen home ownership fall from a peak of 72% to 64%. Yorkshire and the West Midlands have also seen a decline of 10% or more.
The Foundation puts the blame on the gap between “stuttering” wages and house prices that put even modest properties out of reach.
30 years ago first time buyers paid an average of £30,000 for a property; in 2015 that figure was around £150,000 (and a staggering £330,000 in central London). The 10% deposit typically required by mortgage lenders is a huge hurdle for many. Rising rents in the private sector also mean that tenants are spending a higher proportion of their earnings on rent, making it even harder to save.
So is there any good news?
It’s hard to find, but there is some hope.
Interest rates remain extremely low so anyone managing to save enough for a deposit will have low levels of repayments (until rates rise again of course).
Parents are increasingly helping their offspring to get onto the housing ladder; Legal & General reported earlier this year that the Bank of Mum & Dad was expected to be involved in 25% of all mortgage transactions in 2016. So good news for family relationships, with parents basking in the gratitude of their sons and daughters (hope so anyway).
And even if parents can’t help out, the Government’s various Help To Buy schemes are making home ownership affordable for significant numbers. The Government website www.ownyourownhome.gov.uk states that over 300,000 people have been helped to become homeowners. The recently introduced Help to Buy ISA can contribute up to £3000 to first time buyer savings.
Dusty Blackburn, conveyancing operations manager at PM Law, comments, “So far, we haven’t seen large numbers of clients who have taken advantage of the Help to Buy ISA. However, we do expect numbers to rise as the scheme becomes more widely known and savers reach their targets and go on to purchase a property.”
Several of the larger house builders also offer help when buying one of their properties. For example, Persimmon Homes will loan up to 20% of the purchase price through their Helping Hand Scheme, with the buyer choosing when they want to repay the loan.