As the post-recession property market remains dismal, hopes and expectations of homeownership have fallen out of sync with reality. With house prices rising in certain areas, sales plummeting nationwide and banks becoming stricter on their lending, many hopeful buyers have been left clutching onto an idealistic vision of owning their own property.
Property market ‘stagnant’
Hopes of the property market ‘bouncing back’ rapidly were upset by the Royal Institution of Chartered Surveyors (RICs) report that house sales have dropped almost 40pc since the recession.
The RICs UK Housing Survey reported the average number of houses sold for the month per surveyor of May this year to be 15.6 - a significant drop on the 26.5 measured for May 2007, before the recession hit.
In the three months leading up to May this year, estate agents listed with RICs had sold only 23pc of the houses on their books in comparison to 40.9pc in the same period of 2007.
Moreover, 16pc more estate agents reported drops in house prices than they did rises for the month of May 2011 which is inkeeping with the negative territory of the trend since June 2010. However certain areas are starting to show signs of picking up with notable increases in the capital and also areas of ‘outstanding natural beauty’.
Homeownership a ‘long term goal’
Another recent article published by Credit Mortgage Lenders (CML) highlighted that 84pc of adults in Britain hope to purchase their own home in the next ten years while 71pc would like to do so in the next two years. Many of the respondents have little or no idea how they are going to afford it.
The report also showed that it is taking people longer to make their first step onto the property ladder. Today, under a fifth (17pc) of 18-24 year olds own a property which highlights a notable decrease over time as in 1987 over 40pc of people in the same age bracket had bought their home. Before the recession in 2007, just under 30pc of those under 24 were homeowners, a figure that has fallen gradually every year since. Around 40pc of 18-24 year olds said that although they would like to, owning a home in the next 2 years was ‘very unlikely’.
The highest levels of homeownership were found amongst those aged 65+ with nearly 80pc owning their own property.
Funding the first step
In spite of people’s goals to get onto the property ladder, banks’ tightened lending procedures have made things difficult for many first time buyers. Mortgage deposits are likely to need to be larger than ever pushing homeownership hopes even further away for many.
Halifax’s recent ‘Generation Rent’ report found that just 14% of non-homeowners aged between 20 and 45 are actively saving for a deposit. The ‘bank of Mum and Dad’ is still heavily relied on with 44pc of parents having either made or planned to make contributions of around £12,800 to their offspring’s property deposit. Over a third of parents asked admitted concerns regarding their own financial futures as a result of lending.
Mortgage Director at Halifax, Steven Noakes said:
“Our research shows that one year on, young people are still downbeat about their chances of owning a home, and we're also seeing the impact this has on their parents' financial future.”
“Parents think that their kids could make cutbacks on holidays and going out in order to save for a deposit. However, despite concern for their own financial future, parents continue to stump up a contribution or welcome their children back to the nest to allow them to save.”