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Millions give up on home ownership as house prices soar


12-20-2015

 

Britain's reputation as a nation of homeowners is "under threat", analysis of Bank of England survey reveals 
 Middle class families are giving up their dreams of home ownership as soaring costs and a lack of supply price millions out of the property market, according to Bank of England research

 

Middle class families are giving up their dreams of home ownership as soaring costs and a lack of supply price millions out of the property market, according to Bank of England research

While 11pc of the 2,000 people who said they never expect to buy a home preferred to rent, a much greater proportion said affordability was the biggest barrier to home ownership Photo: © Alex Hinds / Alamy Stock Photo

 
By  Szu Ping Chan

 

Middle class families are giving up their dreams of home ownership as soaring costs and a lack of supply price millions out of the property market, according to Bank of England research.


The Bank's annual survey of household finances revealed that just under half of all families who don't already own their own home believe they will never get on the housing ladder.


 

 

 

 

 

 

 

 

 

 

 

 

 

This represents around 4.5m households and compares with 32pc who said they were confident of buying.


The figures, which were buried in the depths of the Bank's survey, showed many middle class families also believe home ownership is out of reach, highlighting the depths of Britain's housing crisis.


Analysis by the Resolution Foundation showed that a quarter of Britain's richest households - earning an average of £60,000 a year after taxes and benefits - believed they would never get on the ladder, while a third of families in the second fifth of households also said they were likely to remain tenants.


For the poorest fifth of households, the prospect of home ownership was even more remote, with more than half of non-homeowners stating that the were unlikely to ever buy.

Matthew Whittaker, chief economist at the Resolution Foundation, said Britain's chronic housing shortage was putting its reputation as a nation of homeowners "under threat".

"It used to be that if you went out to work and did the right thing, you would expect that relatively quickly over the course of your career you would be buying a house, you’d go on holiday every year, you'd save for a pension.

"But those big ticket items have really started to change, not just for lower earners, but for middle income Britain as well," he said.

While 11pc of the 2,000 people who said they never expect to buy a home preferred to rent, a much greater proportion said affordability was the biggest barrier to home ownership.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The survey showed 46pc of households said they could not afford up-front costs such as deposits, stamp duty and estate agent fees, while 33pc said mortgage costs were simply unaffordable.

 

Britain’s home ownership rate has fallen from 73pc in 2007 to 65pc today, according to official data.

George Osborne, the Chancellor, used the Autumn Statement to double the housing budget to £2bn a year from 2018-19 in an attempt to increase supply and deliver 400,000 new homes by the end of the decade.


"Supply has to be the only way forward."

Matthew Whittaker, Resolution Foundation


Mr Osborne has also introduced a series of measures to help get first time buyers on the housing ladder, including the controversial Help to Buy programme and extending Margaret Thatcher's Right to Buy scheme to housing association tenants.

However, Mr Whittaker warned that building more houses was the only way to address the housing crisis.

"Supply has to be the only way forward. If people want to buy more sweets in a sweet shop, giving them more money when there's not enough sweets in the first place doesn't really help," he said.

Separate research by EY showed that house prices are expected to outpace earnings growth in two-thirds of UK regions in 2020, even as wage growth is predicted to strengthen.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The data also showed house prices would consistently grow at a faster pace than earnings in London and the south of England for the rest of the decade.

Mr Whittaker also warned that "practical barriers and political barriers" meant supply may not increase as quickly as policymakers hope.

Dame Kate Barker, a former Bank of England policymaker, warned this month that housebuilders will not be able to build the homes England needs even by the end of the decade, because the industry lacks the capacity to ramp up supply.

Dame Kate, who published an independent review of housing supply in 2004, said England needed to build around 300,000 new homes a year to meet its housing needs.

However, she added: “I think the industry would not be capable of going from here to 300,000 [homes a year] in short order."

www.telegraph.co.uk/

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