Welcome to the Experience Invest property blog. Experience Invest has been in business for at least a decade and has a wealth of information to share, whether you’re a first-time investor or a property connoisseur.  In today’s blog post we share about the housing finance reform.

The study finds that the sharpest fall in first-time buyer homeownership has been among those on middle-incomes (taken as being between £20,000-£30,000 in 2019) – with homeownership rates falling from 65% in 1996 to 27% two decades later. Of the new buyers entering the market today, 64% have household incomes of more than £40,000 and just 16% are individual buyers.

The biggest barrier cited by first-time buyers to get on the ladder is raising a deposit (30%), followed by getting a mortgage based on their income (15%). The challenges faced by today’s first-time buyers include house price inflation outstripping wage inflation – 47% vs 18% in the last ten years – as well as levels of student debt and the costs of childcare. The average age of a first-time buyer has increased from 25 to 33 years old in the last two decades, and 40% have already started a family. As a result, Santander found that the most sought-after first-time buyer property is now a three-bedroom house.

Santander’s research also found that aspiring homeowners are underestimating the size of the deposit they need to save. With the majority of mortgage borrowing limited to 4.5x gross salary, the deposit amount buyers’ in each region say they are looking to save would price individuals, or households relying on a single middle-income, out of every region in the UK.

The ‘Future of the homeownership dream’ report calls for industry and the government to think radically and work together to explore a range of new ideas to ensure the homeownership dream is kept alive for future generations. Potential new policy ideas suggested in the report include:

• Introducing a new lending model backed by the government to help those without family support to raise a deposit;

• Introducing more flexibility in lending affordability criteria, for example, less restrictive ‘stress rates’ for fixed-term mortgages; and
• Making better use of existing housing supply and encouraging greater circulation of homes by introducing a stamp duty incentive for downsizing.

Jerald Solis, Director, Experience Invest said “The Housing Crisis has received a lot of attention over recent years, and today’s study underlines exactly why. The shortage of housing across the UK has meant that demand far outstrips supply, in turn keeping prices prohibitively high for first-time buyers in many regions. Clearly a lot of young people no longer consider it viable to buy their own home.