The cost of buying a first home has hit a 70-year high, making it even more difficult for first-time buyers to get onto the property ladder. According to a report from the Building Societies Association (BSA), Housing analyst Neal Hudson suggests that younger people are increasingly reliant on parental support or two high incomes to buy their first homes. Many are stuck in the rental market instead, as the increasing cost of renting and relative high rates on mortgages are contributing to difficulties of buying a property.
The BSA, which accounts for 25% of mortgage lending says that the housing market needs to change. House prices have seen more growth than earnings growth over the last few years, and the report indicates that younger people’s home ownership has been in decline during the last two decades. The situation has become dire as mortgage interest rates have recently increased, meaning that first-time buyers face raising a deposit and paying a mortgage, which has become unmanageable for many.
Rightmove property portal figures indicate that many buyers looking for homes are in search of large, four-bedroom homes; which can be quite expensive and out of reach for most first-time buyers. The Resolution Foundation, a think-tank, revealed that the most popular living arrangement for a young adult in 1997 was being in a couple with children. But now, it is living with their parents, as almost half of first-time buyers in their 20s are receiving an average of £25,000 in support from their parents.
The BSA report argues there is a need for more flexibility between regulators, such as imposing limits on lending when borrowers can only pay a small deposit. It suggests that “new thinking and radical changes” are necessary to establish a functioning housing market for first-time buyers. Rural homeownership is also getting harder, especially in rural areas where house prices are the most unaffordable. Whichever government is in power after the election should scrutinise the issues facing the first-time buyer market and use all available means to help those wanting to get onto the property ladder
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