Housing predictions exclude first time buyers from property ladder

According to a report out last week the situation for first time buyers is likely to remain as grim as ever. Property ladder hopefuls might realistically need to rent for significantly longer as predictions in the housing market mean that by 2020 buyers will need to earn £64,000 before being able to land a home of their own. The housing charity Shelter who released the report claim that the so called ‘Generation Rent’ are stuck due to rising house prices and more elusive mortgage deals keeping them from home ownership. It might come as no surprise that the picture in London could be even bleaker with £106,000 stated as the salary first time buyers would need to earn.

Deposits for a new home also look set to increase as the housing price average is predicted to be around £270,000, with the average deposit being £46,000 by 2020.

Shelter say that this situation could prevent people putting down roots, meaning that they ‘put their lives on hold’ in order to avoid the instability of private renting. This might be true however, on the flip side, renting also gives people flexibility and freedom from years of mortgage payments. For first time buyers in the future there could be greater alternatives to purchasing property such as longer term rental agreements or greater opportunities for help to buy or shared ownership.

The Government does not share the concerns of the report stating that they are committed to helping people own their own home if they want to. A representative from the Department for Communities and Local Government states: “…we have set out the biggest, boldest and most ambitious plan for housing in a generation, including £8 billion to deliver over 400,000 affordable new homes.”

Shelter believe the main problem to be that the UK housing crisis has ultimately come about by prices rising six times faster than salaries and therefore it is perhaps to be expected that the situation of people effectively being ‘locked out’ of the housing market has occurred. According to the Office of National Statistics it is the homes for first time buyers that are rising quicker at 8% nationally compared to 7.6% for other homes, thus adding further pressure. Whilst the Government promise to address the affordable housing issue it would seem Shelter think the problem will persist with untold implications for the future.