The struggles facing young people as they try to get on the property ladder are affecting the financial future of their families, with the bank of mum and dad feeling the strain.
One third of parents are concerned for their own financial future, with 44% of them forking out an average of £12,800 towards their children’s deposits, and 6% contributing to monthly mortgage payments, while 24% have had their children move back home as adults due to the current housing market.
New research by Halifax and NatCen Social Research shows that half of 20 to 45-year-olds think Britain will become a nation of renters within a generation, with most believing that their mortgage applications will be refused.
The latest research updates that of a year ago when Halifax identified and named Generation Rent.
Separate research out today by YouGov, published by the Council of Mortgage Lenders, shows that 81% of British adults hope to own their own home in ten years’ time and 74% in two years – with aspirations far exceeding the current reality in the younger age groups.
But, says the CML, it is ‘far from clear whether and how people will achieve their home ownership goal’.
Meanwhile, Stephen Noakes, mortgage director at Halifax, said: “One year on, young people are still downbeat about their chances of owning a home, and we’re also seeing the impact this has on their parents’ financial future.
“Parents think that their kids could make cutbacks on holidays and going out in order to save for a deposit. However, despite concern for their own financial future, parents continue to stump up a contribution or welcome their children back to the nest to allow them to save.”
Just over half (54%) of 20 to 45-year-olds believe that Britain should remain a nation of home owners, with an overwhelming 78% agreeing that it is a good financial investment. However, despite this, of the 8,042 people aged 20 to 45 questioned:
• 25% do not want to own a home (an increase of two percentage points on 2011)
• Two in five (40%) would like to buy a home but do not believe they will ever be able to
• Just 31% have a serious intention to buy within the next five years
• 50% believe Britain will become a nation of renters within a generation (up four percentage points since 2011).
The size of a deposit, high house prices and job security were identified as the top three barriers to home ownership, with the average FTB deposit standing at £24,647.
Nearly three in five (59%) potential home owners believe that lenders accept less than 40% of mortgage applications.
Comments
It's like living in an insane asylum living in this country"
Feel free to leave these shores unless you are stuck in the asylum mate!
and still 800,000 +transactions this year rather kills these clever arguments, that’s a lot of people putting their money where their mouth is, not on a key board!
@ Puzzled
I guess that's what happens if your children are losers. Selfish losers at that. Happy to see their parents in a caravan just so they don't have to pull their finger out.
Shared ownership? What a pair of clowns.
Timothy, I wouldn't believe that bunkum peddled that banks would go under; that's just what they have us believe to prevent an alternative.
Half of all housing is mortgage free, those with mortgages are on a fairly equal sliding scale between 0-99% equity. Clearly the lenders could account for, say, a 20% drop in prices without the world coming to an end.
But, then, why would they when they've got the majority in neo-serfdom whether they realise it or not. Far better to give the banks bailouts and bonuses for a job well done.
Furthermore POTW it never stops raining on this small damp rock. Why would you want to buy a house in the UK when you are legally entitled to live anywhere in Europe!
I have British friends who live in Hungary, Germany, France, Portugal & Spain.
Well done "Puzzled of Tunbridge Wells". That is the first sensible comment that I have read about the housing market in 30 years (at least)!
Non of the present crisis in the housing market should come as a surprise to anyone with half an ounce of common sense and we could all see it coming a mile off. We just buried our heads in the sand about it.
It's as plain as the nose on your face that, if you build a system of what is effectively HP over a 30 year payback time then, by the time you own the property outright, there will be the next generation knocking on the door, increasing demand and pushing up prices. Solution, according to primary school economics? Increase supply! Only trouble is, no one is prepared to increase the supply at the purchase price that can be afforded.
Add to that the crazy situation that ensures that interest rates are so low that cash investment is not attracted to the housing market lenders, and that produces a demand for mortgage finance that cannot be fulfilled (no money available, it has all been invested somewhere else!).
What is needed is a housing price reduction (by increasing interest rates) to levels that first-time buyers can afford. Only trouble is, the banks can't afford to let this happen because they would lose too much in un-repayable loans already given for the purchase of overvalued houses. The banks would go bust, depositors would lose their assets and the whole pack of cards would come tumbling down; so it will never happen.
Financially, we all live in a "mythical bubble" and it's high time we all came down to earth and started to "get real". Same goes for the mythical economic growth that all western governments are banging on about. It just can't happen; we have reached the top of an economic cycle and the best we can possibly hope for until the next "industrial revolutionary development" (the digital age was the last one) is the status quo.
Well who'd have thought it eh? Massive rises in prices have priced the next generation out of home ownership and the precious equity is having to be shared out to get the next generation out of the baby boomers' hair.
It's what I and others have been saying for years - that this nonsense is completely unsustainable.
Yet ... agents still try to talk the market up ALL the time.
I have a friend that is selling up, moving into a mobile home park and dividing the proceeds of the house between his two children. One is over 40, the other is 38 and neither have made it further than a bit of shared ownership which has not increased in price for 6 years or more. They both have young families and none of them can see a way forward. So the old ones will live in a mobile home for the rest of their lives so the young ones can buy themselves a half decent place to live.
And, when they sell their house, other people will hang huge debts around their necks so my friend can get at his equity.
It's like living in an insane asylum living in this country. All for a pile of bricks, timber and plasterboard.
£12,800 is about the cost of 4 weeks in the sun. It is worth every penny of that to have the house back.