The report, titled Saving the British Dream, was conducted by Public First with support from the Home Builders Federation
The problem is extensive, with only 10.4% of 20-44 year-olds who do not already own a home being in a financial position to buy their first home.
The HBF-supported housing report examines the issue in depth and makes recommendations on how to tackle it.
Stipulations for those who can afford
Of the 10.4% that can afford, a large portion can only do so due to being in a relationship where they can pool their funds together. The report estimates that just 2.9% of young, single adults are financially able to afford their first home.
This leaves a concerningly high 89% of people aged 20-44, who do not already own a home, in a financial position to buy their first home. This is due to a lack of savings for a deposit, not being able to borrow enough for the purchase price of an average first home in their region on their current salary, or not having enough disposable income to meet the affordability criteria of mortgage lenders.
Borrowing power is the largest issue, with only 17% of people having an income high enough to meet those needs.
Furthermore, of the general public, including older home owners, 87% believe that it is difficult for young people to buy a first home. Common language amongst survey respondents includes the older generations “letting down” the younger generations, and the younger generations needing a “leg up”.
Current first time buyer demand sits at around 350,000 households, but if all the young adults in a position to buy a home were to do so over the next five years, this would amount to just 69,000 purchases.
HBF-supported housing report calls for more government support
Despite historic support from several parliaments, the report highlights that any scheme for first time buyers is notably absent at the moment. The Mortgage Guarantee Scheme is a minor scheme in comparison, helping to facilitate only around 10,000 first time buyers.
Therefore, a large scale and dedicated scheme is needed, with an equity-loan scheme being highly recommended. This would be part-funded by industry, and would lower the deposit and affordability barriers for new homes.
The loan would be interest free for five years. The scheme would guarantee repayment over time, and is likely to make a positive return as the Help to Buy scheme did.
It is estimated that such a scheme at 20% would immediately allow 490,000 young people to buy their first home, and the positive return could help to fund 98,500 new homes over five years. 69% of the survey respondents supported this idea.
Furthermore, £5.7bn in additional economic activity would be generated per year, or £28.5bn over five years.
The report can be read in full here.
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