Great Britain: A nation of renters
New figures suggest that as the gap between property prices and wage growth widens, first-time buyers will struggle to purchase a home even in 2020.
Just 25 years ago, almost 70% of those in their thirties enjoyed the freedom gained by home ownership – and even at the turn of the century that figure was still hovering around the 60% mark. In the last 15 years, however, there has been a marked downturn in the number of potential homebuyers achieving the same dream. This is considered by many to be a reflection of the growing gap between property prices and wage growth.
New figures released by homeless charity Shelter have revealed that by 2020, the average first-time buyer will need a minimum income of £64,000 to purchase a house – a sum considered too cost prohibitive for most, as Trading Economics projects the wage for the average UK worker to be as low as £28,000. These figures are worrying for many in the 25-34 age demographic, as even with a combined income, the average couple would still face a shortfall of £8,000.
UK house buying experts believe this is partly due to the lack of new properties being built, despite promises by the government. With property prices rising at six times the rate of wages, this trend looks set to continue well into the future.
The number of those in their thirties who own a house has almost halved in less than seven years, from 1.24 million in 2007 to 2.2 million in 2014, with a 15% increase in those within the same age range who rent.
“When house prices are increasing six times faster than the average wage, it’s no wonder people on ordinary incomes are being locked out of a home of their own,” said Campbell Robb, chief executive of Shelter.
“With the situation only set to get worse, Generation Rent will be forced to resign themselves to a life in expensive, unstable private renting, and wave goodbye to their dreams of a home to put down their roots in.”
For those looking to scrape together a deposit in the current economic climate, these new figures are a depressing sign that things will only get harder as time goes on. The knock-on effects include a reduction in the number of potential homebuyers, leaving those looking for a fast house sale at a distinct disadvantage. For those looking to sell their home fast, there are however options including property buying companies who will buy any house for cash, without the seller incurring any extra processing fees usually associated with the house-selling process.