A report has claimed that, unless the government addresses the housing shortage, the number of young adults able to buy homes could fall nearly 50% within five years. Housing charity Shelter warns only 20% of 25- to 34-year-olds will be on the property ladder in 2020 compared with 60% recorded 10 years ago
Over the past decade, home ownership among 25-34-year-olds has dropped by a third, from 1.8m to 1.2m, and analysis by the housing charity Shelter published on Friday 22nd of May 2015, suggests that if current trends continue, the number of young homeowners will drop to about 616,600 by the end of this parliament. This would mean that less than 20% in that age group would have made it on to the property ladder, compared with nearly 60% a decade ago.
In recent years, soaring house prices and problems with getting mortgages have pushed more young households into the private rented sector. In 2004, just over 675,000 people aged 25-34 were tenants. However, by 2014, the number was 1.6m. As home ownership becomes increasingly difficult, Shelter said the number of renters could rise to 2.3m by 2020. In addition, it said, a “clipped-wing generation” of young adults living with their parents had emerged.
The report followed government figures showing that the number of new homes built last year remained well below the level needed to meet demand. A total of 125,110 homes were built in England in 2014-15, up from 112,400 the previous year, but this is half the rate some experts say is needed.
Those stuck in rented accommodation have seen rents rise by 4.6% over the past year, according to figures from letting agents Your Move and Reeds Rains. The increase, the fastest recorded by the index since November 2010, pushed the average rent in England and Wales to a new high of £774 a month. In London, the average was up 7.8% year-on-year at £1,204.
For homeowners and buyers, however, the mortgage price war is continuing to push rates down to record lows, with one leading lender unveiling the UK’s cheapest two-year fixed-rate home loan, priced at 1.07%. The new loan, from Yorkshire building society, trumps a 1.09% deal launched by Co-operative Bank earlier this month. However, the Yorkshire’s mortgage has a £1,369 product fee and is available only to customers able to stump up a hefty 35% deposit.
Rachel Springall, a spokeswoman for the financial data website Moneyfacts.co.uk, said the new home loan was “the lowest ever fixed mortgage on record”, adding: “With the rate war ongoing, this is the perfect time for borrowers to secure a low fixed rate.”
Mike Regnier, Yorkshire building society’s chief commercial officer, said: “We are a responsible mutual lender which uses its financial strength to support its members rather than external shareholders. This means we can offer our members very competitive rates in order to enable them to buy the home of their choice.”