Home ownership becoming exclusive members' club, says housing group

Home ownership becoming exclusive members' club, says housing group

www.guardian.co.uk, Sep 14, 2014

Home ownership is becoming an "exclusive members' club", with today's typical first-time buyer needing a deposit almost 10 times as big as that required in the early 1980s, according to the National Housing Federation (NHF).

In a report titled Broken Market, Broken Dreams, the organisation says two-thirds of first-time buyers receive financial help from their parents – a figure it says has doubled in five years.

"Only the wealthiest of the next generation will be able to buy a home if current trends continue," says the NHF, which represents housing associations that provide 2.5m homes for more than five million people. "First-time buyers today have to earn more, borrow more, stump up a larger deposit and rely more on family wealth than even a generation ago."

The report says people buying their first home now have to put down an average £30,000 deposit, which it says is almost a tenfold increase in real terms on 30 years ago.

A first-time buyer typically has to borrow 3.4 times their annual income, compared with their counterparts in 1979 who needed to borrow 1.7 times their income.

As a result, home ownership is being pushed out of reach of average earners including nurses, firefighters and plumbers, who typically earn between £27,000 and £30,000 a year.

A YouGov poll carried out for the NHF found that almost 80% of people in England thought it was harder to own a home now than it was for their parents' generation. Eight in 10 respondents did not believe any of the main political parties would effectively deal with housing.

David Orr, chief executive of the NHF, said: "With a bold long-term government plan for housebuilding, our housing crisis is solvable. We desperately need politicians from all sides to commit to ending the housing crisis within a generation."

A separate survey shows the housing market picked up earlier than usual after the summer break. Sellers' asking prices rose 0.9% in September, the first time since 2011 that prices have risen at this time of year, according to the property website Rightmove. It said that over the past 10 years asking prices had typically fallen by 0.5% in September.

Rightmove director Miles Shipside said: "We usually see a price fall at this time of year as potential home movers are generally still in holiday mode. However, it looks like there are early signs of a bounce-back in demand after the summer lull, leaving those estate agents with a shortage of stock at a potential disadvantage and therefore eager to attract new instructions."

Rents are still rising by far more than wages, according to data from agency HomeLet. Average rents jumped by 2.3% in August alone, and are up by 8.2% over the year, compared with the 1.25% rate of wage growth for employees.

HomeLet, which takes its data from tenant references made by 1,700 individuals a day, said that when London was excluded from the picture, the increases were much lower, and in some regions there were falls. It said average rents in the north-east, at £525, were down 1.7% over the past year. Rents in Yorkshire and Humberside have inched ahead by 0.8% to reach an average of £612.

But tenants in London continue to face spiralling costs. The average rent in the capital rose from £1,429 a month in July to £1,464 in August, and are running 11.4% higher than last year.

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