As house prices continue to soar, a thought provoking piece of research commissioned by Shelter has explored what this means for the next generation of home owners - and the results are surprising in their scale. The latest ONS house price index shows that between February 2015 and February 2016, the average cost of a home for first-time buyers in the UK rose by 8%.
This is nothing new to most people, house price inflation is something of a political comfort blanket - the nation of homeowners feel unsettled when prices go down. However, stepping into the future, this increase takes home ownership away from whole generations fairly quickly.
The research looks ahead, asking what, on average, a first-time buyer may have to earn per year in order to access a mortgage on a typical property by 2020 (if prices rise in line with recent projections). The research shows that typical first-time buyers in the UK are expected to need to earn £64k a year. On top of this they would need a deposit of £46,000.
It also explores what hope there is for wages to catch up by examining how local house prices have grown compared to local earnings over the last five years. Between 2010 and 2015, house prices in the UK rose six times faster than the median full-time salary, suggesting first-time buyers will continue to struggle if things continue as they are.
Increasingly, first time buyers are supporting new residential developments simply because they are increasing supply. Large numbers of younger people desperate to escape the trap of ‘Generation Rent’ are understandably in favour of both affordable, and private sale, new homes. This urgent need for new homes is often less represented, less visible and felt less keenly by local communities because younger people tend to be less involved in the community and so their views are not often heard. These views are nonetheless forming a stronger and stronger part of supported motivations. The need for new homes is there, and growing, we just need to make sure people hear it.
This article was written by Director Daniel Hayman