A “significant” number of potential first-time buyers have failed to get on the property ladder since the financial crisis, a report from the Building Societies Association has found.
The report, which analysed historic first-time buyer data, showed around 7.2mn individuals or couples would have been expected to buy their first home since 2006.
However, only 5mn achieved home ownership in this time, meaning there are 2.2mn missing first-time buyers from the property market.
BSA head of mortgage and housing policy, Paul Broadhead, said: “I’m disappointed that 12 months on from our first report, which highlighted the struggles faced by first-time buyers and the potential road map for change, the barriers to home ownership remain the same today.
“It’s shocking that 2.2mn first-time buyers who would have reasonably expected to buy their own home have failed to do so since the financial crisis.
“And every day that passes without real action the number of potential lifetime renters is growing.
“We know that there is no single solution for all first-time buyers, and not all aspiring homeowners will be able to achieve their dream whilst the double affordability challenge of the high cost of buying and high cost of owning a home remains.”
The report pointed out that today’s first-time buyers face a “double affordability” challenge of both an almost record-high cost of buying a home and the end of record-low mortgage rates.
As a result, repayments as a proportion of income for new first-time buyers has increased by around 30 per cent, or 22 per cent of income, since its low in 2020, when it stood at 18 per cent.
As a result, most successful first-time buyers are stretching themselves to get on the property ladder, with many using higher loan-to-income and higher loan-to-value mortgages to mitigate the challenge of raising the initial deposit.
The association argued that choosing to have a higher monthly repayment, supported in part by wage growth, is likely to be the biggest factor that has enabled successful first-time buyers to achieve home ownership.
Solutions
To support the missing millions, the association suggested several solutions the government and the regulator could implement, such as ending the sole focus on demand side interventions and focus on supply as well.
It argued the government must continue to build on its actions to support the housing market as the changes so far will take time to filter through and additional house building is likely to “fall short” of the ambitious target which has been set.
Alongside policy action, the association pointed out that regulatory changes are also needed.
“Last year we highlighted how since the financial crisis the pendulum had swung too far towards a stricter regulatory environment rather than towards the social benefits of higher rates of home ownership,” it stated.
“More flexibility to allow lenders to support first-time homebuyers is needed, such as an increase in the availability of 95 per cent loan-to-value mortgages and a review of the cap on high loan-to-income lending.”
tom.dunstan@ft.com
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