Young continue to be priced out of home ownership – ONS

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Young continue to be priced out of home ownership – ONS

There has been a steep decline in the past two decades in the number of homeowners in England under the age of 35, a report by the Office for National Statistics has revealed.

The report showed that in 1991, 67 per cent of 25- to 34-year-olds in England were homeowners. However, by 2012 that figure had fallen to less than 43 per cent, while among 35- to 44-year-olds it was also down sharply, from 78 per cent to 64 per cent.

In contrast, homeownership increased among older age groups, and first-time buyers peaked in the mid-1980s when one-in-three 16- to 24-year-olds could afford a home.

The number of property sales in the UK almost halved from a peak of 1.67m in 2006 to 0.86m in 2009. Since 2009, figures have partially recovered, increasing to 1.07m in 2013, according to the ONS house price index from November 2014.

The number of first-time buyers also declined steeply. Between 1980 and 2002 the number of mortgages agreed for first-time buyers averaged 486,000 a year. In 2003, there was a 31 per cent decline on the previous year and a 47 per cent decrease in 2008 on the previous year.

While the ONS reported an increase in homeownership in the past year by first-time buyers, it remained below pre-2003 the figures.

The report suggested that the rise in deposit values was a contributing factor, as well as the economic downturn and rising house prices.

The average deposit for first-time buyers, as a percentage of purchase price, increased by almost 10 per cent between 1988 and 2013, making up 22 per cent of the house price, according to the report.

However, while deposits have fallen since 2009, they have remained among the highest for 25 years.

Stephen Smith, director of Legal & General’s Mortgage Club, said: “While house price growth in the UK has begun to slow in the past few months, it is important not to lose sight of the long-term trends. Prices in the UK grew by 10 per cent in the year to November, with prices in London and the south east inflating hugely.”

Adviser View

David Hollingworth, associate director at Bath-based London & Country Mortgages, said: “First-time buyers have been hit hard post-crisis, with the need for big deposits, and house prices not falling as radically as thought, and for a while there were no prospects for those with smaller deposits.

“However, we are coming out of that to a degree, with more options for first-time buyers to put down a small deposit and rates improved, so that helps with affordabilty.”