The gap between what aspiring homeowners can ‘realistically’ afford and the actual cost of purchasing a property has widened significantly in recent years, according to the latest report from The Home Builders Federation (HBF), Broken Ladder: The Affordability Gap.
As a result, HBF is now calling for government support to address the affordability crisis for first-time buyers with a new equity loan scheme. Despite strong demand for housing, millions are unable to turn that demand into a purchase, with young people and first-time buyers worst affected, they say.
The research found that home ownership in England has fallen significantly over the past two decades. The share of households owning their home peaked in 2003 at 71%, equivalent to 14.7 million homes. By 2024, ownership had dropped to 64.8%.
HBF says that adjusted for population growth, this represents more than 1.5 million ‘missing’ homeowner households who would own a home today if early 2000s ownership rates had been maintained. The report found that the fall in ownership has affected every age group under 65. The largest decline is among 35 to 44 year olds, who would otherwise account for around 800,000 additional owning households. Ownership among those aged 25 to 34, 45 to 54 and 55 to 64 has also fallen by around half a million in each group.
In contrast, ownership among over-65s has risen by more than 500,000 households, highlighting the growing concentration of housing wealth among older generations.
The Federation highlights that the closure of the Help to Buy scheme in 2022 has led to the first sustained period in decades where first-time buyers have been left without meaningful government support, ‘further weakening the opportunities for households to access the market and widening the affordability gap’.
As a result of their findings, HBF is now calling on the government to introduce a new targeted equity loan scheme for first-time buyers. The proposal would provide a 15% equity loan on new build homes, funded through a combination of government support and a developer fee.
Neil Jefferson, chief executive, the Home Builders Federation, said:
“The gap between what people can afford and the cost of buying a home has become a major barrier to home ownership. For millions of younger households, saving a deposit and bridging that affordability gap is no longer realistic.
“Without government intervention, home ownership will continue to fall and become the preserve of a smaller, older and wealthier group. Help to Buy demonstrated that well-designed equity loan schemes can support buyers, boost supply and deliver strong returns for taxpayers.
“A new, targeted first-time buyer equity loan scheme, part-funded by developers, would restore access to affordable mortgage finance, support new housing delivery, create jobs and growth and give a new generation a fair chance to get onto the housing ladder.”
