Rocketing house prices and years without real-terms wages growth have prompted a growing number of younger people to give up the idea of ever owning their own home, according to a major report on attitudes to getting on the property ladder.
The proportion of people aged between 20 and 45 putting money aside for a deposit had been steady for three years but fell last year by six percentage points to 43%, according to the Generation Rent report from the bank Halifax.
In a blow to government hopes that its help-to-buy mortgage subsidy scheme had turned around attitudes, the lender said its report strengthens the view that more people may be abandoning the dream of home ownership and accepting the idea of long-term renting. It suggested lower levels of ownership may become “the new normal”.
The separate campaign group, also called Generation Rent, blamed the fall in deposit saving on a 20% rise in house prices over the last two years.
“This wouldn’t be a problem if renting was a legitimate alternative to home ownership, but it is expensive, insecure and often of poor quality,” a spokesperson said.
A spokesman for housing charity Shelter said that even with interest rates at historic lows, “sky-high house prices mean millions are still locked out of homeownership”.
The Halifax report follows a series of embarrassing figures for the chancellor, George Osborne, and business secretary, Vince Cable, who have spearheaded the government’s campaign to stimulate housebuilding by boosting demand.
After construction of new homes dwindled in the aftermath of the banking crash to levels not seen since the 1920s, there was a pickup in 2013, but that was reversed in the second half of last year with a 20% fall compared with the first half. The most recent official figures showed a further 5% drop in January after the Christmas break.
Last week, the Labour party said the government needed to take direct action to boost supply, promising a £5bn future homes fund to build 125,000 homes over the course of the next parliament. Ed Miliband said the fund was a key element of the party’s plan to raise construction levels to 200,000 a year by 2020.
Osborne has pledged to increase the number of new homes, though mainly through the relaxation of planning rules and schemes such as help to buy, which have enabled people to get on or move up the property ladder with a low deposit.
But the Halifax report found that while 53% of people said they believed the scheme has had a positive impact, most thought first-time buyers still find it difficult to get finance. The lender found 79% of 20- to 45-year-olds believed banks do not want to lend to first-time buyers, and 21% believe it is virtually impossible for first-time buyers to obtain a mortgage.
Respondents were also unwilling to save more than £10,000 for a deposit, far short of the sum needed in many areas of the country, especially those that have seen soaring house prices. Non-homeowners said they would be willing to put money aside for about five years and four months to save for a deposit at £33 a week.
The report gathered information from more than 40,000 20- to 45-year-olds and 4,000 parents with children aged between 20 and 45.