Most renters feel they’re unlikely to buy home in next five years – review

Most renters feel they're unlikely to buy home in next five years – review Labour-backed study also finds two-thirds of general population think governnment should do more to help first-time buyers

Almost two-thirds of renters in the UK believe they are unlikely to buy a home in the next five years, according to research for a Labour-backed inquiry into the housing crisis.

The warning is a preview to the results of the survey, which will be published on Wednesday. The Redfern review, led by Pete Redfern, the chief executive of housebuilder Taylor Wimpey, has examined the reasons for the decline in homeownership.

A poll of about 2,000 people from around the UK found 62% of those living in rented accommodation felt they were unlikely to buy in the next five years. Among the population as a whole, 49% thought more should be done to disincentivise buy-to-let, while two-thirds thought the government should do more to help first-time buyers. Eight out of 10 people believed buying a property had become more difficult over the past decade.

The findings have been revealed as separate research shows house prices have started to bounce back after a lull in the immediate aftermath of the Brexit vote, making it more difficult still for first-time buyers to purchase a home.

The proportion of households that own a property has fallen to a 30-year low of 62%. The average age of a first-time buyer is 34 in parts of London and 30 for the country as a whole, according to recent figures from the Halifax. This has led to the rise of “generation rent”, with 344,000 fewer households under the age of 35 owning their home than in 2010, a decline of about a fifth.

Redfern has been advised by experts including Kate Barker, author of a review on housing supply, and Terrie Alafat, chief executive of the Chartered Institute of Housing. Barker’s review, published in 2004, said about 250,000 homes needed to be built each year to keep a lid on price inflation. Since then the number of homes created has lagged behind that figure, with net new housing supply in England peaking at 223,530 in 2006/07 and falling to 124,720 seven years later.

John Healey, the shadow housing minister who commissioned the Redfern review, said Labour was determined to turn around the fall in homeownership, and the review would “give us the new analysis and ideas to do it”.

He claimed the figures showed increasing numbers of young people were likely to be giving up on the idea of owning a property altogether.

“After years of house prices rising faster than pay, many young people have simply given up hope that the housing crisis can be fixed, and worry they will never have the same security of owning a home that their parents did,” he said.
New figures from the property website Rightmove show the difficulties in affording a first home. Although asking prices for new listings fell by 1.1% in November, to an average of £305,670, sellers of properties typically bought by first-time buyers – two-bedroom homes and smaller – were 1.7% higher in November than in October, at an average of £192,147. Separate figures from the estate agency haart, showed a 2.8% jump in the price first-time buyers had agreed for homes. This compared with 0.5% recorded across all UK sales.

Earlier this year, analysis by the charity Equality Trust found 86% of renters – who make up about 6m households – had less than the £8,838 needed for a 5% deposit on the average home.

Miles Shipside, the director of Rightmove, said the overall fall in asking prices in November was the smallest for the month in five years. He added: “Price resilience is not good news for cash-strapped aspiring first-time buyers, and in spite of the more subdued time of year the smaller properties that they typically target have increased in price this month, the only market sector to show an increase.

“In the sprint to get on to the housing ladder, wage inflation to help meet lender affordability ratios and to save for the larger deposits required is being comprehensively outrun by price increases.”

Shipside said first-time buyers needed help in the government’s autumn statement on 23 November. “Short-term options that might be top of a first-time buyer’s list would be a stamp duty holiday exclusive to them,” he said. “However, there are dangers to increasing demand unless this is matched by policies to improve supply, and more radical steps need to be taken to remove some of the barriers preventing more affordable homes to buy and rent from being built in the right locations.”

In its submission before the autumn statement, the Joseph Rowntree Foundation called on the government to invest an extra £1.1bn in providing social housing through a living rents scheme, which would link monthly costs and local wages. It said the investment could help deliver 80,000 homes each year in England, half at living rent levels.

Source:https://www.theguardian.com/business/2016/nov/14/most-renters-feel-theyre-unlikely-to-buy-home-in-next-five-years-review

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