While there are many reasons to be downbeat about our progress on meeting people’s housing needs, young people can still take advantage of the current opportunities for first-time buyers.
As someone still living at home and yet to climb her first step on the property ladder, I have always found the prospect of renting or buying a property somewhat daunting. There seems to be a general consensus that ‘leaving the nest’ or indeed moving out from your family home is the hardest it has ever been. For that reason, I wanted to write this post trying to show that the property market is not all doom and gloom for a first time buyer; in fact it may be a great time for it.
Whilst it is true that according to the Office of National Statistics (ONS) since 1991 the percentage of people aged between 25-34 who own a home has fallen by more than 20% by 2014, there is also proof that consumer confidence in the housing market is returning and with the government’s affordable home ownership schemes that weight on first time buyers' shoulders may not seem as hefty as it once did.
Evidence of confidence returning can be seen by the fact that more first time buyers took out a mortgage in 2014 than in any year since 2007 according to Halifax figures. Lenders are offering significantly better deals to these buyers, and my advice would be to take advantage of it while you still can.
I have also mentioned the government’s ‘Help-to-Buy’ schemes, the aim of which is quite simply in the name. Their ‘New-to-Buy’ Scheme specifically targets first time buyers and allows them to buy a newly built home with a deposit of only 5% of the purchase price. The scheme has already helped 13,000 homebuyers within 3 months and housing minister Kris Hopkins has said that the “estimate[d] wider economic benefits could be as much as £1.8 billion”
A popular question when it comes to the ‘Help-to-Buy’ schemes seems to be ‘how many new homes will it build?’ especially with the number of new homes being built still at the lowest in peacetime since the 1920s. A Commons Public Accounts Committee (or PAC) report cited government estimates that 25-50% of purchases through ‘Help-to-Buy’ led to the construction of a home that would otherwise not have been built. Not only this but market intelligence gathered by the Department for Communities and Local Government (DCLG) indicated that it “may be improving the confidence and appetite” of developers to build more homes. If the estimates and market research are correct then arguably at least this aspect of the scheme could be called a success.
Although if you look at the specific areas which the schemes have positively affected you will see the little traction it has had in London and the South-East, despite these being the areas of greatest housing need. Good news however if you are living in the North or Midlands as this is where it has been most popular. But big challenges still persist – last year the ONS reported that record levels of young adults were living at home as a result of growing house prices and rising youth unemployment. Half of young renters have also given up on home ownership, while we still need to massively increase the supply of affordable homes to meet rising demand and social need. Something needs to change systematically for the housing issue to really be solved; people can’t expect housing to be a continuous investment whilst also allowing property prices to remain low enough to make them affordable.
If you are a first time buyer I hope this post has made you feel slightly more confident about entering the property market for the first time and if you’re already far up the property ladder I hope it gives you some comfort that the current economic climate at least in respect to housing isn’t as bad as you may have once thought. The affordability schemes may be a step in the right direction towards supporting communities which will hold social value in the future but there is still far to go before housing issues are no longer at the top of the political agenda.
Lorna Hunter is an A-level student who recently completed work experience at the RSA.
Atif Shafique presents five key take-aways from the RSA's recent publication on co-living - a form of housing that builds community by combining private living space with communal facilities.