Owning your own home in England will become an unreachable target for Millions of UK citizens over the next decade.
Tighter mortgage criteria from recession-bruised banks, particularly for First Time Buyers means that home ownership is set to fall to its lowest point since the 1980’s.
The gloomy housing forecasts were made this week in a report by Oxford Economics for the National Housing Federation.
The Federation represents England’s housing associations
The report stated that home ownership is expected to decline most sharply in areas where house prices and deposit requirements are likely to rise in the medium term, such as London, the South West and the West Midlands. However the report also predicts that home ownership levels will remain stable in the North East and Yorkshire and Humber.
The rate of home ownership in England had previously peaked at 72.5% back in 2001 but the new report claims that the proportion of people living in owner-occupied homes will decline from 67% in 2011 to 64% in only 10 years time.
UK home ownership has declined as a result of higher property prices and tighter and more stringent mortgage lending criteria, despite the fact that mortgage interest rates are extremely low, following efforts by the Bank of England (BoE) to prop up the struggling UK economy.
The reality for many is the difficulty getting a mortgage in the first place. The study found that banks are incredibly cautious about first-time buyers. Whilst some lending conditions have eased for people who already own property, First-Time Buyers (FTB’s) have to put down up to 30% of the property price, as a deposit, compared to only 15% before the recession hit in 2007. FTB’s are also only able to borrow about 2.8 times their income, compared with the peak of 3.2 times prior to the credit crunch.
The National Housing Federation have been lobbying the UK government to invest more in affordable housing for a number of years, Chief Executive of the NHF, David Orr, said
“Home ownership is increasingly becoming the preserve of the wealthy and, in parts of the country like London, the very wealthy”.
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