Owning your own home is something we all aspire to, but the growing gulf between housing ‘haves’ and ‘have-nots’ is leaving young buyers out in the cold. No wonder, with spiralling student debt to the hefty tune of £44,000 – the highest debt levels in the world.
As if the challenges faced by first-time buyers aren’t already ample enough, without huge student debt weighing them down creating a 'potential crisis' that will lock millions out of owning homes!
The damning effects of student loans, sky high fees and borrowing just to live means the financial squeeze on young people is at the heart of a long-term decline in the number of home owners, according to the Intermediary Mortgage Lenders Association and a review by one of the UK's largest house builders Taylor Wimpey.
Their findings showed that 59 per cent of mortgage lenders saw student loans as a barrier to home ownership for younger borrowers and 66 per cent of mortgage advisers believing higher student debt will contribute to locking future generations out of the housing market.
The two biggest drivers since the financial crisis in 2008 have been the marked fall in incomes and access to mortgage finance, more so now as student debt ultimately take decades to pay off and is factored into lenders’ rigorous affordability tests, therefore reducing the amount aspiring homebuyers can borrow or indeed save for a deposit.
A massive hike in fees since 2012 – led by none other than the then Chancellor George Osborne – has forced millions of students to borrow more to fund their education over and above the cost of living, with Student Loans Company figures showing that overall UK student debt has risen 88 per cent in just four years - from £46 billion in 2012 to £86 billion at the end of March 2016.
At the same time home ownership rates have declined dramatically, according to the Institute for Fiscal Studies and someone born in the mid-1960s had a 45 per cent chance of owning a home aged 25, falling to just 21 per cent of those born in the mid-1980s who want to buy their first home today.
Think tank, the Resolution Foundation, has also estimated that first-time buyers now need to save for over 20 years to be able to afford a typical deposit for the purchase of their first home - compared to just three and five years during the 1980s and early 1990s.
Earlier this month the Department of Work and Pensions published a report into intergenerational fairness and concluded: “The opportunities that were open to baby boomers to buy a home with a relatively small deposit are closed to todays young”.
Maybe the Prime Minister Theresa May should revisit the vow she made to “make society fairer” and actually do something to tackle the wealth inequality in our country. Her very own Chancellor of the Exchequer, Philip Hammond, has also said: “Making housing more affordable will be a vital part of building a country that works for everyone.”
Well, get on with it then and stop paying lip service where successive governments have consistently failed! To date, the Tories haven’t revealed any intention for a new housing policy and instead of party politics, the ‘powers that be’ should get a grip of reality and deal with the long-term housing crisis if there is any hope to improve the position for future generation.