The Social Mobility Commission says that home ownership is in ‘free fall’ among young brits, as their figures show that the number of 25-29-year-old homeowners has halved in the last 20 years; as a record number of young Brits rely on their parents to help buy their first home. In 1990, 63% of 25-29 year olds owned their own home, compared to now in 2017, the number has slipped to 31%, as buyers struggle to get on the property ladder. More than a third of first time buyers are relying on a gift or loan from their parents to purchase a property, compared with just 20% seven years ago. And a further 1 in 10 buyers relied on inherited wealth to buy their first home.
The reason for this is that today’s first time buyers face the struggle of rising house prices paired with a tighter mortgage lending criteria. House prices have been rising significantly faster than earnings in recent years, and this has led to affordability becoming increasingly stretched.
The Commission have stated that young people from less well-off backgrounds are finding it near impossible to get a foot on to the housing ladder, and the situation is causing damaging consequences for social mobility. Owning a home is becoming an increasingly unrealisable dream for a lot of young people in our country who cannot dip their hand into the bank of mum and dad for help getting onto the property ladder. It isn’t only first time buyers that need parental guidance. 12% of existing homeowners also needed a loan from their family to enable them to trade up the housing market.
This report from the Social Mobility Commission estimates that the number of buyers relying on mum and dad for help buying a home will peak at around 40% in 2022 or 2025, depending on how the UK’s economy performs. The commission is calling upon the government to improve the situation by building 3 million homes in the coming decade, and wants to see more public land sold for new homes. They have also suggested that the Governments Starter Homes initiative should focus more on households with lower incomes, and to make sure that when these properties are sold, they are made available to other low-income households at the same discount.