Reports from the National Housing Federation show that more so than ever, young people are having to rely on their parents in order to take the first steps onto the property ladder. A staggering two-thirds of buyers are turning to the bank of mum and dad in order to scrape together a satisfactory deposit for their first home.
The number of young professionals looking to their parents for financial help when purchasing their first home is said to have doubled within the last 5 years. The National Housing Federation are warning that a whole generation could miss out of property ownership.
Figures released have revealed first time buyers are now needing an average deposit of £30,000 — more than ten times the deposit needed in the early 1980s.
David Orr, Chief Executive of the National Housing Federation comments, "With the high salary, and huge deposit younger generations now need to buy even a modest home, home ownership is quickly becoming an exclusive members club. Sadly, it will depend on the wealth of the family you were born into as much as your own hard work."
On average, mortgage values are around 3.4 times the buyer’s salary, far greater than in 1979 when the amount people needed to borrow was only 1.7 times their income. Orr predicts house prices, which reached a 7 year high in July this year, will equate to 13 times the average salary by 2030.
The National Association of Estate Agents (NAEA) have released their own reports and in June, they’ve seen a 20% decrease in the number of first time buyers. This was a 5% decrease since May and the lowest level recorded since the same time last year.
Part of the study conducted also shows adults aged 18 to 30 only represented 3% of property sales in June — the lowest percentage ever recorded by the NAEA.
Managing Director of NAEA, Mark Hayward blames the market low on new rules set out for lenders which came out this year, saying, "New rules mean buyers will also have to prove they can easily afford the repayments now and in the future." — as a consequence they then turn to their parents for financial aid.
Housing minister, Brandon Lewis says reports fail to consider new government measures, including Help To Buy scheme which has helped more than 50,000 people, so insists the reports do not show an accurate picture.
Are you seeing a pattern — are there fewer young people within your client base? What do you think the reasons are for this drop in the first time buyer market?