Young Buyers Over Reliant On Family Support
Soaring house prices, political uncertainty and stagnant wages for created a difficult market for people trying to purchase UK property in 2019.
As the year draws to an end, and the Government look for more new homes to be built than ever before, more people are also resigned to the fact that home ownership may be out of reach.
A third of those renting privately in the UK feel as though renting for life will become the norm in the near future.
Furthermore, 28% of those aged 35-44 believe they will never earn or save enough to afford a property of their own, according to Halifax research.
Even though almost 100,000 more first-time buyers purchased property in the first half of 2019 compared with the 72,180 purchases made in the opening half of 2009, younger buyers are forced to look at alternative lending streams and even multiple sources of help before they are able to save for a deposit.
A growing trend amongst younger home buyers has involved lending money from grandparents with 32% of millennial buyers and 12% of all buyers dependent on support from their oldest relatives before buying property, according to Trussle.
The average homeowner needed to borrow 30% of the typical housing deposit before they were able to buy their property, taking £7,400 from their aging relatives in the process.
This lending source looks set for exponential growth as almost a quarter (23%) of potential buyers believe they will need to borrow money from more than one relative, including grandparents, before they are able to purchase a property.
Unfortunately, a growing divide between house price growth and wage growth on top of a significant gender gap has meant women in the UK find it more difficult to save for a property when compared with their male counterparts.
Whilst a third (33%) of women perceive saving for a deposit as the main obstacle for home ownership, only a fifth of men feel as though they will be unable to save the necessary money.
According to research from Coreco, the gender pay gap gulf was 8.6% in 2018, yet the average earnings of a woman applying for a mortgage totalled just 65% of the average male wage.
Despite this disadvantage, women were also less likely to accept money from relatives. Less than a quarter (23%) were utilising help from relatives compared with 28% of male savers and only a tenth (12%) were looking to use an inheritance whilst this rose to 16% of male buyers.
Russell Galley, Managing Director at Halifax, commented:
“Taking that first step onto the property ladder remains a rite of passage for many.”
“Last year, first-time buyers accounted for the majority of the mortgage market for the first time in well over 20 years. This shows that with the right support and a few sacrifices, home ownership can remain an attainable goal.
“The financial hurdle of saving enough for a deposit might feel like a daunting or at times near-impossible task, but there are a number of options out there, including government schemes and family support mortgages, to help put first-time buyers on the right track.”
Dilpreet Bhagrath, Mortgage Expert at Trussle, said:
“Saving for a house deposit can be extremely difficult given that the average house price is now nearly eight times income. This can be even harder for those who are renting at the same time – so financial support from family members is often essential to get on the property ladder.
“The research underlines the generosity being shown by grandparents across the UK as they help the younger generation get onto the property ladder.
“But, clearly not everyone can rely on financial help from family and friends. There are a range of affordable schemes to help first-time buyers, such as the Help To Buy Equity Loan and Shared Ownership. However, more must be done to improve access to the housing market and this is where both Government and the industry needs to step up and consider innovative new approaches.”
Sue Hayes, Managing Director of retail finance at Aldermore, said:
“It is concerning to see the barriers to home ownership having a greater impact on women. We need to address financial inequality in our society to help tackle gender disparities so that becoming a home owner is achievable for all.
“The house buying journey is a stressful one and can feel very overwhelming for new homeowners. The industry needs to work together to provide a straightforward process and remove hurdles for all first time buyers. At Aldermore, we offer a variety of product choices and personal service to give first time buyers the best possible options in a challenging market.”
Does the market need to offer more support for younger buyers to ensure they are not so reliant on lending sources which discriminates poorer home savers?