MortgagesJul 13 2017

Affordability bigger barrier to home ownership than in 2008

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Affordability bigger barrier to home ownership than in 2008

Affordability is a significantly bigger barrier to home ownership now than the last time figures were compiled in the midst of the financial crisis, a survey by the Department for Communities and Local Government has found.

Two thirds of all renters – 65 per cent – said affordability was the main barrier to home ownership.

The proportion of private renters who said affordability was the main barrier increased from 56 per cent in 2008/09 to 70 per cent in 2015/16.

The English Housing Survey also found that being a private renter was the most expensive form of housing tenure – costing an average of £184 a week.

Meanwhile having a mortgage cost £159 a week and being a local authority renter cost £95 a week.

The report said: “Using all household income, on average, those buying their home with a mortgage spent 18 per cent of their household income on mortgage payments whereas rent payments were 28 per cent of household income for social renters and 35 per cent of household income for private renters.”

In 2015/16, 59 per cent of private renters expected to buy at some point in the future (2.6m households), unchanged from 2014/15.

Among social renters, 27 per cent (1m households) expected to buy.

Between 2014/15 and 2015/16, the proportion of social renters who expected to buy increased from 24 per cent to 27 per cent.

The survey found that the main reason households did not apply for a mortgage was because they did not think their deposit was large enough.

This was given as a reason by 47 per cent of renters who considered applying for a mortgage.

Elsewhere the English Housing Survey revealed the changing face of first time buyers - and the impact rising unaffordability is having.

Today’s first time buyers are older, more likely to buy with a partner, and to have dependent children compared with a decade ago.

As a testimony to the struggles of affordability facing many trying to get onto the housing ladder, the survey found the average first time buyer deposit is now a staggering £94,088 in London and a slightly more manageable £40,931 in the rest of the country.

damian.fantato@ft.com