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First-time Buyer

Is home ownership a reality for the next generation?

Lucinda Beeman
Written By:
Lucinda Beeman
Posted:
Updated:
10/12/2014

Recent research found that 49 per cent of non-homeowners think they’ll never get a foot on the ladder. Is it harder than ever to buy a house?

House prices rose 8.5 per cent in the year to August according to statistics from the Land Registry, with the average property value of £177,824 hovering near the 2007 peak of £181,000. With prices in London and the South East rocketing 21.6 per cent and 11.6 per cent respectively, renters are going to ever-greater lengths to get a foothold.

Mortgages one in 10 Brits would change jobs or relocate to get on the housing ladder, while 1.1m would leave the country altogether if it meant they could buy a house. Young people were found to be much more willing to go to extreme lengths, with 18 to 24-year-oldsmore willing to reduce their standard of living, use their inheritance or take on additional debt to pad out a deposit.

Paula John, editor-in-chief of YourMortgage.co.uk, says: “I have long believed that it takes a psychologist rather than an economist to understand the UK property market and the lengths many British people will go to in order to buy their own home. Maybe it has something to do with us feeling insecure as an island nation? Perhaps we are mistrustful of external forces and crave the reassurance of our own personal castles?”

According to property expert Henry Pryor homeownership in Britain stood at just 15 per cent after the First World War, picking up with the creation of purpose built ‘garden cities’ and peaking in the late 1970s with the introduction of Margaret Thatcher’s ‘Rent to Buy’ scheme. Almost three quarters of the population now own their own homes, Pryor says, and homeownership is firmly rooted in the British psyche.

Helen Adams, managing director of FirstRungNow, says that the British desire to own rather than rent is both practical and emotive. While the wisdom of living in a paid-off property through retirement is undeniable, it’s not the only attraction of property ownership.

She says: “Owning your own property means you can control you environment, from choosing the décor to not being asked to move on by a landlord. Tenancy terminations on the behalf of landlords can be really disruptive. The strong desire to own property is still alive and strong in Britain.”

Pryor thinks that this desire is driven by politicians. He explains: “Home ownership makes voters stakeholders and gives them a certain civic pride that tenants never display. Voters are extremely forgiving of financial mismanagement if they feel better off, and who can complain about raising house prices?”

Struggling first-time buyers, for one. Santander’s research found that 49 per cent of non-homeowners never expect to step onto the property ladder while surveys done by FirstRungNow showed first-time buyers loosing hope as prices climb over their affordability threshold. Regardless, Adams doesn’t see the desire to own a home waning amongst young people.

She says: “Today’s young people are just as excited and keen to own property, but with the need to save for a deposit and costs it’s hard. However, it’s always been hard. The difference is that today we’re facing a greater draw on our finances. We live in a ‘spending’ environment. Fewer people want to make the sacrifices and we see the results of that.”

Pryor sees renting becoming ‘cooler’ because of its flexibility and the fact that for many it’s the only option. And, he says, improving communication links could make it easier for people to leave the crowded and expensive South East for areas with a lower cost of living.

He says: “Getting on the housing ladder may seem impossible for many but in reality it is no harder than it was for previous generations. Some will continue to make huge sacrifices to achieve homeownership just as some will pay through the nose for their kids’ education, but more and more are disillusioned by the dream of homeownership.”