If you're trying to get on the housing ladder, you'll know how difficult it can be. Being able to save enough for a deposit and secure that vital first mortgage will be the biggest hurdle, and thanks to rising house prices, that goal can seem increasingly out of reach. It's little wonder, then, that so many first-time buyers rely on the Bank of Mum and Dad to help them take that first step, with research revealing that this kind of support is steadily on the rise.
According to research from the Social Mobility Commission, the proportion of first-time buyers relying on inherited wealth or outright loans from the Bank of Mum and Dad has reached a historic high, and the trend looks set to continue.
The report found that young people on lower incomes are finding it nearly impossible to get on the housing ladder, which means Generation Rent could be a long-term phenomenon. Indeed, the proportion of young people who are homeowners has fallen dramatically in recent years: for 25-29 year-olds, home ownership has fallen by more than half in the last 25 years, down from 63% in 1990 to just 31% most recently.
This means that less than a third of today's twenty-somethings are homeowners, with many of those who eventually manage to buy not doing so until an older age. Even those who do take that first step will often have to rely on external support, with 34% of first-time buyers in England now turning to family for a gift or loan to help them buy, and one in 10 relying on inherited wealth.
This is compared with just 20% seven years ago, highlighting how quickly the landscape is changing. This upwards trend looks set to continue, too: the report says that the proportion of would-be buyers relying on their parents to help them get a first-time buyer mortgage could rise to nearly 40% by 2029, or could even reach a peak of 39% by 2021/22.
It isn't only first-time buyers who benefit from parental support, either, with 12% of existing homeowners also receiving a financial gift or loan when moving up the ladder. Again, rising house prices could have a lot to answer for, as even with increased equity, trying to move up the ladder while at the same time securing a competitive mortgage deal can still be a challenge.
"Home ownership is in free-fall among young families," said The Rt Hon Alan Milburn, chair of the Social Mobility Commission. "Owning a home is becoming a distant dream for millions of young people on low incomes who do not have the luxury of relying on the Bank of Mum and Dad to give them a foot up on the housing ladder."
The report's lead author, Dr Paul Sanderson from Anglia Ruskin University, added: "Over the past few decades, pressure on housing affordability has been increasing, leading to a significant decrease in the proportion of young people entering home ownership. Those who do manage to become first-time buyers tend to do so at a later age than the previous generation.
"Affordability problems mean that parents and other family members have a critical role in assisting their children to buy their first home, [and] going forward, the gap is likely to continue between those in the
who can acquire that most significant of financial assets – the family home – and those who cannot.
"Only better-off young people and those who have parents who have already accumulated housing wealth are likely to be able to consider home-ownership without radical changes to the housing market."
It makes for bleak reading, but if you're one of the many younger buyers hoping to take that first step, what can you do to improve your chances? We've got a guide that can help, as well as a few extra tips to help you save up for that all-important deposit.
You may want to look for support outside the family unit, in which case the Government may be able to step in – the Help to Buy equity loan scheme could be worth considering, as could a Help to Buy ISA, or you may want to wait a week for the Lifetime ISA to be launched instead. Whatever you do, don't give up! There are things you can do, and hopefully, you'll be taking that first step on the ladder before you know it.
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