The report, Broken Ladder: Stairway to Never, says that several factors have reduced the number of people able to afford property
The Home Builders Federation (HBF) property ladder report investigates several aspects that have caused a drop in potential buyers.
The key takeaway is that these circumstances are making buying a home simply unaffordable for a huge proportion of people.
Rising house prices and lack of support shown in HBF property ladder report
The rise in prices for both houses and mortgages are a key issue for many, with a lack of a current government support scheme exacerbating the issue.
Affordable mortgage lending is also lacking, causing financial difficulties, and reaching a point where only the top 30% of earners are able to buy a home.
A key remedy for the issue would be further government support for buyers, says the HBF property ladder report, as it is the first time in a long time that first-time buyers have no government initiative to assist them in buying a home.
As a result, many people are on incomes that are affordable for a mortgage; however, they are unable to save up the money for a deposit due to increasing living costs while renting.
The Help to Buy scheme is the government’s most recent aid for buyers, which ended in 2022. In that year, a two-income household would need to be earning around £25,000 per year each to afford a new home, at an average cost of £302,916.
Now, the same two-income household will need to be earning more than £37,000 each, locking out a quarter of buyers that would be able to afford the same home in 2022.
“Government urgently needs to intervene”
The HBF’s report shows that the Help to Buy scheme mostly benefitted moderate-income households, with nearly all users earning below £60,000. 85% were first-time buyers.
The scheme also gained a 9% uplift on loans, reaching £718m, showing the scheme was profitable for the government as well.
Therefore the HBF is proposing a similar scheme, with targeted equity loans for first-time buyers supporting deposits with government backed loans and funded partly by developer fees.
The scheme will help access more affordable mortgage deals and allow moderate-income households to afford homes more easily at a time when increasing homeownership is crucial.
Neil Jefferson, chief executive officer at HBF, said: “The lack of affordable mortgage availability and support for buyers has created a significant barrier between aspiring homeowners and their first step onto the ladder. For many, in particular young people. Homeownership is no longer just difficult; it is impossible without support.
“Government urgently needs to intervene and support buyers by establishing a new fair and targeted scheme to restore affordability and access to home ownership.
“Supporting buyers would not only provide a new generation with the benefits home ownership brings, but it would also directly lead to an increase in home building, creating jobs and boosting economies across the country.”
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