Halifax’s annual Generation Rent report came out today, and the main finding is how renters are becoming resigned to their fate.
There were some positives with the highest number of first time buyers for 7 years, although we are a long way off the levels of half a million seen in 2002. However, there is little improvement in how potential first time buyer view their chances – with 79% of 20-45 year olds believing that banks don’t want to lend to first time buyers and 21% believing it is virtually impossible to obtain a mortgage.
Perhaps the most telling statistic was what the proportion of people saving for a deposit has dropped – it is now only 43%, down from 57%. An indication that more people are giving up on ever owning their own home and accepting renting as a way of living.
There has been a supposed wider attitude change to renting as the number of people said they’d never feel settled or fully at home whilst renting was down to just 54%. The percentage of those who worried about retiring whilst renting for their entire life had also decreased from 57% to 52% and those who said that they do not want to raise children in rented accommodation has also dropped from 43% to 40%. However, the fact that 16% of people now don’t want to get on the housing ladder, compared to 13% in 2011, shouldn’t necessarily be seen as a lifestyle choice but an acceptance of the reality that faces Generation Rent.
There are number of barriers to homeownership: 57% cite the size of the deposit, 56% cite the high property price and 53% cite low income as the main barriers. There was a marked increase in those citing high property prices and low income as the main barrier, reflecting the realities of the market today. As the report pointed out, house prices have risen 14.8% in the last 5 years yet the average income has only increased by 4.2%.
London is where the property market is particularly broken – it has the lowest proportion of homeowners aged 20-45 at just 39% and the highest number of people in this age range who worry they will never own a home (82%). London also had the highest number of those who don’t own a property but would like to buy being prepared to make compromises, at 95%, including compromising on location and type of property. With house prices in the capital as high as they are, it is unsurprising, without such compromises (and even with them) most people will never be able to buy.
The problem is, at the moment it doesn’t seem like a choice to rent, a whole generation is being forced to rent when they would like to buy because they have no hope of ever being able to afford their own home. Halifax says that there is work to be done to change the perception that first time buyers will never get approved for mortgages, but there is even more work to be done on building homes that first time buyers can afford to purchase. Simply propping up the demand through schemes such as Help to Buy, rather than just building more affordable homes, is actually hindering first time buyers overall. In the meanwhile, there is serious work to be done in the rental market to make renting fit for purpose.
The Guardian, 7 April
The Independent, 7 April
The Financial Times, 7 April
CityMetric, 9 April