Rental Demand to Remain High as Rising House Prices Challenge First-Time Buyers

Recent research conducted by the HomeOwners Alliance has unveiled a stark reality for many young Britons: the dream of homeownership is increasingly out of reach. This alarming trend is underscored by the sentiment that 1.9 million aspiring homeowners have little hope of emulating their property-owning parents, with only 48 percent believing they will own a home themselves, despite three-quarters reporting that their parents owned theirs.

A Generational Divide in Homeownership
The study highlights a significant generational shift, with 81 percent of current homeowners having followed in the homeownership footsteps of their parents. This pattern suggests a diminishing prospect for future generations to own property, as the tradition of homeownership sees a decline.

A vast majority of non-homeowners (71 percent) aspire to purchase a property someday, yet more than half (52 percent) fear that goal will remain unattainable. The primary barriers cited include prohibitive house prices (60 percent), the challenge of amassing a deposit (44 percent), and difficulties in affording monthly mortgage repayments (33 percent) or securing mortgage approval (31 percent).

Government Schemes and Long-term Mortgages: A Temporary Fix?
The research also points to a growing reliance on government schemes among younger homeowners, with 28 percent depending on such initiatives to afford a home. Furthermore, lengthy mortgage terms, extending 30 years or more, are becoming commonplace for 38 percent of homeowners aged 18-34, indicating a shift towards more prolonged financial commitments to manage affordability.

Calls for Government Action
HOA Chief Executive Paula Higgins voiced criticism of the government’s handling of the housing crisis, attributing the dwindling homeownership rates among young people to a failure in constructing sufficient affordable housing. Higgins remarks, “The government has failed aspiring homeowners, and continues to degrade the life chances of young people by continually not building enough homes.”

She highlighted the detrimental long-term effects of the housing shortage, which necessitates dependence on parental support or lengthy mortgage terms, thereby increasing the overall cost to the homeowner. Higgins also lamented the cessation of the government’s Help to Buy scheme without a replacement, underscoring the urgent need for new initiatives to bridge the affordability gap.

As the nation approaches a pivotal election, Higgins underscores the importance of addressing the housing crisis, stating, “With the upcoming election, a key issue will be how the parties plan to build more homes and provide much-needed support to first-time buyers.” This call to action seeks to rekindle the possibility of homeownership for millions of young Britons currently sidelined in a market that remains elusive.

For Landlords: Seizing Opportunities in a Shifting Market
As the dynamics of the UK housing market evolve, private residential landlords are positioned to play a pivotal role in addressing the growing demand for rental properties. With the challenges facing first-time buyers leading to an uptick in rental demand, now is a critical time for landlords to reassess their strategies, ensure their properties meet the needs of modern renters, and explore opportunities for growth and investment in this changing landscape.