Homebuyers priced out of ‘exclusive club’
THE BROKEN dreams of many priced-out buyers are highlighted by a
new report that warns home ownership is turning into an "exclusive
Average first-time buyers are now paying − in real
terms − TEN times as much in deposit than their counterparts
did in the early 1980s, says the National Housing Federation (NHF),
and two-thirds of them now rely on financial help from parents.
The affordability gap is so big, says the NHF, only the
wealthiest would-be homeowners in the next generation will be able
to afford the deposits and mortgage costs that lenders call
Launching the Broken Market, Broken Dreams report, NHF
Chief Executive David Orr warns "home ownership is quickly becoming
an exclusive members club". He urges the government to come up with
a bold long-term plan and start building more homes that ordinary
people like nurses, firefighters and plumbers can afford.
The call for more affordable homes − including shared ownership houses and apartments
like these at Arden Fields (pictured above) in
Knowle − has the backing of Bromford Homes Head of Sales Alan
"Broken Dreams certainly sums up the sense of disappointment and
frustration that many younger homebuyers are feeling," says shared
ownership expert Alan.
"The NHF is right in saying that homeownership is beyond the
reach of many average earners − people such as nurses,
firefighters and retail workers. Average first-time buyers need big
salaries, big deposits − and, in many cases, financial help
from the Bank of Mum and Dad − in order to buy even a modest
home on the open market.
"This reflects what the vast majority of our customers tell
us − and, for them, shared ownership's low deposits and
affordable monthly costs offer the only way of getting onto the
Nurse Deborah Collins agrees. Like many, she had all but given
up hope of being able buy her own home in high-price Dickens Heath,
Solihull. "We had been renting for six years. I had a deposit and
wanted to stay in the area but couldn't afford to buy here because
property is so expensive," says Debbie.
"Then friends told me about Aspenwood (pictured above)
and I found out about Bromford's shared ownership homes. That
changed everything. The part-buy, part-rent deal means I was able
to buy a share that I could afford and the total monthly costs are
no more than I was paying in rent to a private landlord."
Would Deborah recommend shared ownership to other priced-out
homehunters? "Absolutely. Shared ownership offers people like me a
truly affordable way of getting onto the property ladder. My son
and I now live in a lovely location and have a beautiful home I can
Key findings in Broken Market, Broken Dreams:
- The average first-time buyer today needs a £30,000 deposit,
almost ten times* the deposit required in the early 1980s
- First-time buyers have an average income of £36,500, compared
to the average salary for first-time buyers in the 1980s of
- A first-time buyer has to borrow 3.4 times their annual income
on average, compared to first time buyers in 1979 who needed to
borrow just 1.7 times their income
- Two thirds of first-time buyers receive financial help from
parents - a figure that has doubled in five years
* To find out how the NHF worked out its figures, read the report.
15 September 2014