If you’re young and want to get onto the property market – think again. The cost of jumping on board is so high, it’s locked out thousands of first-time buyers. And it’s a problem that’s unlikely to be solved for a generation.
This depressing state of affairs has been put forward by insurer Genworth Financial. The number of mortgages taken out with 10% deposits (associated with first-time buyers) has crashed and burned from 245,000 in 2006 to only 28,000 in 2009.
That’s a massive 89% drop and could represent 100,000 first-timers buyers being excluded from the property ladder each year. Sure, house prices are dropping, but compared to earnings their cost is still high. A 10% deposit requires a saving of at least £18,600, which can rise to as high as £29,700 in London.
I’m a London renter, but I’ll be well into my 30s before I’ve saved that much cash. Woe is me.
First-timers need help from parents
The only hope for first-time buyers is to get help from their parents. And although the number of under-30s buying with assistance has remained constant, they now make up 80% of all first-timers – unassisted buyers have basically been locked out.
But we still want to own a home, damn it! Four in ten prospective young buyers think private renting is simply ‘throwing money away’. With the amount of rent I’m paying every month in London I wholeheartedly agree.
So deposits are too high a hurdle. Buying a house comes with too many extra costs. And mortgage lending is at its lowest for 10 years. What hope have we got if we don’t get help from our parents – an option that simply isn’t an on hand for many, including me.
And since first-timers drive the property market, the whole thing is quite simply broken. Genworth Financial warns that it could take decades to fix, which in the end will prevent a whole generation from living under the roof of their very own home. So what do you think should be done to solve this dire situation? Personally, I’m off to whimper into my coffee.