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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 members club".

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 for.

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.

Arden House 

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 Bradley.

"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 property ladder."

Wyevale

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 actually afford."

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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 £20,000*
  • 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