Parents Worried Children Won't Be Able To Buy A Home
A recent survey carried out has suggested that 49% of parents believe their children will not be able to afford a home without inheritance from them. The survey carried out by YouGov said that just under half of their children would only be able to buy a home if they were given money by family or were fortunate enough to inherit. The survey highlights the issues faced by young people today who want to buy a home as it is certainly getting harder as house prices continue to grow.
Figures from the Office For National Statistics also show a big drop in homeownership amongst young people. In the last ten years the proportion of homeownership aged 25-34 has dropped from 59% to 36%. This is a big shift and is really being forced on young people who are unable to buy in the current climate. It is hoped that this is not a long term trend as the government starts to help young people with the various incentive schemes on offer.
Buy To let landlords have not helped young people
Unfortunately for young people and first time buyers the property market has seen a massive shift over the last 25 years. Over the last couple of decades the housing market has seen lots of other players come onto the scene, the biggest of which is the buy to let landlord who is probably seen as the main competitor to first time buyers. The buy to let market did not exist 25 years ago. Estate agents never got involved with letting's whereas now there are more letting agents that estate agents.
Most landlords were accidental landlords or family homes were rented out whilst the owners were overseas. The explosion in finance and buy to let mortgages changed all of that and property prices have benefited enormously. Buy to let landlords are buying blocks of flats before they have been built and many young first time buyers are not getting a look in. Now wealthy pensioners will be competing for flats as their pension funds mature and they are able to buy property under the new rule changes. It is highly likely that this is also going to drive up houseprices particularly as fewer homes are being built.
UK Government has been accused of inflating house prices
The government could also be blamed in part because it has pumped up demand with the help to buy scheme which has been a major contributor to house price inflation. Most of the problem with young people getting onto the housing ladder comes with raising the deposit. Depending on where you live you need a minimum of £25,000 deposit to put dozen on a home. If you live in the south-east of England this figure can be doubled.
Unless you are are given the money by the bank of mum and dad where are you going to get that kind of money from? It is a very sad state of affairs because few parents are able to help their children out with such a hefty deposit. In the old days you could put a £5,000 deposit down and get a 95% mortgage and buy a home. This has all changed and young people are now forced to take out much more debt than in the past. That is fine as long as interest rates are low but many are concerned that there will be problems for young homeowners when interest rates start to rise.