A report from Halifax titled ëGeneration Rentí has revealed that fewer young people are saving to put down a deposit on a house compared to last year. The amount of people within the demographic of 20-45 years old saving money for a house has gone down from 57% last year to 43% this year.
The study reveals that the increase in house prices and relative drop in wages is behind this trend. The size of the deposit needed to get on the property ladder is an additional factor. Further to this, it has been revealed that London has the highest percentage of young people who fear they will never manage to get on the property ladder.
The report from Halifax references data revealing a growing belief amongst the young that home ownership is a futile dream and renting a property is the way forward. The report stated that there was a growing pursuit of simply renting ìa nice home, in an area they want to live in andÖthe right size of property. If this pattern continues then it suggests that over the long-term, homeownership levels in the UK will continue to decrease.î
The report corroborates other recent research into the levels of homeownership in the United Kingdom. For example, the Department for Communities and Local Government released a study demonstrating homeownership had plummeted to its lowest in twenty nine years. This report also stated that the trend was particularly pronounced in young people.
The Department for Communities and Local Government showed further that the amount of young people aged between 24 years and 34 years who are privately renting a property has doubled since 2003/04. In 2013/14, a huge 48% of people of this age living in households in the United Kingdom were renting from a private landlord.
Nationwide Building Society have released figures revealing house prices are on average 5.1% higher in the United Kingdom compared to last year, with the average house price arriving at £189,454.
There is some good news for young people attempting to get on the property ladder. As a result of the ëHelp to Buyí scheme initiated by the Government, the rate of mortgage approvals for first-time buyers has hit the highest level they have been at since 2007.
Alongside this positive news, Halifax released data showing that just over half of people they surveyed concerning the ëHelp to Buyí scheme said that it had a positive effect in terms of helping them purchase a home. Further to this, 8% thought it had a negative impact and 39% said they were unsure.
The people surveyed who were looking to buy a home informed Halifax that on average they would be prepared to save for five years and four months to accumulate enough for a deposit on a property. Furthermore, the average they could save each week was £33.35.
Further to this, the report by Halifax highlighted the problem for those living in London and looking to buy in the area. A huge 68% of those surveyed from London said the high price of property was the biggest problem they faced. The UK average was significantly less at 56%.
The problems for young people in the capital are further enhanced by the fact that there is the lowest percentage of those between 20-45 years owning a property in London. Additionally, 82% within this demographic fear they will never possess sufficient funds to purchase a home. Expanding on the problem, the report found that 79% of those interviewed who were aged between 20-45 years thought that banks were against lending to first-time buyers.
The mortgage director from Halifax, Craig McKinlay, stated: ìWhile there has been an increase in first-time buyers in the last twelve months, at the same time there is also a growing group of young people who believe they wonít 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.î
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