Nearly half of non-homeowners in the UK think they will never get on the property ladder, new research has found.
The findings from wealth manager Close Brothers, which surveyed 1,003 employers and 5,003 employees last year, revealed that 47 per cent of non-homeowners felt that homeownership was a ‘pipe-dream’ despite it remaining an aspiration for 65 per cent of those polled.
According to the ONS, average house prices in Britain have skyrocketed by more than 270 per cent over the past two decades, pushing back the age at which people become homeowners by at least eight years.
Close Brothers found four in ten of its employees don’t even know where to start when it comes to getting onto the housing ladder.
On top of this, further research from the wealth manager showed that a quarter of UK employees are spending more than half of their monthly income on housing costs, while 10 per cent are spending more than 70 per cent.
A total of 13 per cent said their housing costs were unaffordable, rising to 19 per cent for millennials — the group most likely to be looking to get on the housing ladder.
Jeanette Makings, head of financial education at Close Brothers, said: "A huge proportion of people’s salaries are going on housing costs.
"This makes saving for the future more difficult and contributes to the scale of uncertainty when it comes to taking the first step onto the property ladder."
Ms Makings said all these issues could be improved with a solid financial education programme which supported people in their savings ambitions.
Professor Sir Cary Cooper, an expert in workplace wellbeing, said: "Shelter is an absolute necessity and being worried about housing affordability can unsurprisingly damage a person’s wellbeing regardless of whether they’re at home or work.
"Whether it be paying the rent, taking the leap as a first-time buyer, or the impact of a variable interest rate in times of economic uncertainty, it’s vital that employees are comfortable and confident in how to approach their finances when it comes to housing."
Nick Morrey, product technical manager at John Charcol, said he would be interested to see how many of the 50 per cent who thought they would never be able to get on the housing ladder had actually looked and tried various lenders to get a mortgage.
He said: "They may not be able to buy where they want or borrow the exact amount they would like, but I think often these people get disheartened at the first hurdle and give up on getting a mortgage at all.
"People often don’t know what they can or can’t do — have they looked at Help to Buy or shared ownership, for instance?"
Mr Morrey suggested if in future half of the population couldn’t buy a property the market would regulate itself.
He said: "If there are no buyers because they can’t afford it, house prices would come down. It’s a simple supply and demand issue."
He also said that with the recent changes to the buy-to-let sector, the market was unlikely to see a "property elite" who owned all the property while the rest of the country rented from them.
He added: "I would have been worried about that four or five years ago, but the slowing down of people entering the buy-to-let sector and the changes in tax and regulation mean this is probably not an issue anymore."
Landlords have been subject to a number of regulatory changes in recent years, with the introduction of an additional 3 per cent stamp duty surcharge on second homes in April 2016, followed by cuts to mortgage interest tax relief.
Last week, research showed the number of buy-to-let properties up for sale increased by 25 per cent in April in a sign that more landlords were looking to exit the market.
In order to help the housing market keep moving, Mr Morrey said a tax break for people downsizing and passing on money to their children would help shake up the stagnant position.
He said: "We need some kind of help for second steppers, which is hard to come by, but freeing up more property in the upper end of the market would only be a good thing.
"We need to keep building houses, incentivise downsizing and try and help those second steppers that would shift the market along."
Earlier today, the secretary of state for Housing, Communities and Local Government, James Brokenshire, said first-time buyers should be able to use their pension pots to top up their savings for a house deposit in an effort to help those unable to make the first step onto the housing ladder.
imogen.tew@ft.com
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