80% of under 30s need help to buy a home
Mar 3rd, 2010 | By Les Sheppard | Category: MoneyWelcome back! Have you made sure you never miss a new property? Subscribe to updates with your best email address in the sidebar to the right.You see everything new at least 48 hours before the crowd!
The Council of Mortgage Lenders estimates 80% of all under 30s now need financial help from a parent or relative to get on to the housing ladder.
The figure nudged up to 45% pre-credit crunch, but has now almost doubled.
The CML says the overall effect is that for those in the formerly typical first-time age bracket of 25-34, the likelihood of buying at the moment is around half its level of a decade ago.
The comments are made in its latest issue of News and Views, where it says a housing shortfall is also hampering the first-time buyer market.
It says the speed and intensity with which the characteristics of the typical first-time buyer have changed are stark.
It says: “What is most striking is that to get into the market, today’s first-time buyer is putting in a deposit of around £34,000, equivalent to more than their total gross annual household income.
“Only three years ago the deposit required to enter the market was a much more manageable – but still hefty – 37% of annual household income, at £12,700.”
It paints a bleak picture and says the effect of this is likely to be that first-time buyers will continue to face significant deposit challenges to enter the market, and that the trend of falling home-ownership that had already begun before the credit crunch will continue.
It adds: “There are very real questions about how to deliver a significant enough flow of housing in general, of whatever tenure, to meet the needs of the growing population.”
The CML believes private sector funding constraints and public sector spending cutbacks are likely to produce a significant shortfall in the supply of both housing finance, and housing itself, relative to the demand for it.
Between 1999 and 2009, the number of new homes built each year has ranged from around 130,000 to around 170,000. By contrast, it is now estimated that a range of 238,000 to 290,000 new homes are needed per year to meet housing needs.
It calls on lenders and the government to try and tackle the current housing shortfall.
The CML says: “The lending industry has a continuing significant role to play, as it always has had, in fostering the creativity and innovation that can devise new solutions to old problems. And there are many examples of this, as lenders continue to lend across the spectrum – to developers, to housing associations, to home-owners and to private landlords.
“But there is also a significant role for government, through both the planning system and other means, to help support conditions that will help the market eventually climb out of the housing shortfall that currently exists.”
Source: Mortgage Strategy
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