The dream of homeownership at a young age will be over in the next decade without urgent action from the government and industry, according to Santander.
A first-time buyer study, published by the lender on Wednesday (July 31), showed although nine out of 10 young people wanted to get on the property ladder, the reality was that by 2026 just one in four under 34s were set to achieve that goal.
The lender polled 5,002 non-homeowners earlier this year and found 70 per cent of potential first-time buyers believed the ‘homeownership dream’ was over for young people, with 64 per cent expecting homeownership to fall even further for future generations.
This was despite the fact more than half (51 per cent) of those surveyed said owning their own home was one of their top life goals — more so than having children (27 per cent) or getting married (19 per cent).
From the research, Santander forecasted that by 2026 the number of under 34s owning a home would have halved compared with 2006.
Miguel Sard, managing director at Santander Mortgages, said it was clear the aspiration to own a home was just as strong as previous generations but looked “increasingly out of reach”.
He said that without change homeownership was at risk of only being available to the wealthiest young buyers and that the findings should be a “wake-up call” for the industry and the government.
The findings showed the biggest barrier cited by first-time buyers to get on the ladder was raising a deposit (30 per cent) followed by affordability problems surrounding their income (15 per cent).
At the same time most first-time buyers were underestimating the size of the deposit they needed to save and two fifths said they had saved nothing towards their first-home.
The report stated the average age of a first-time buyer had increased from 25 to 33 years old over the past two decades and 40 per cent of new homeowners now already have a family.
According to Santander, this meant the most sought-after first-time buyer property was a three-bedroom house.
The report also showed 39 per cent of first-time buyers had help from living family and 10 per cent from inheritance, but the lender warned costs of ‘later life’ could lead to future financial challenges for those gifting wealth.
Nearly three quarters (74 per cent) of those polled believed the government should do more to help first-time buyers.
More than a third (37 per cent) wanted the Help to Buy scheme extended beyond 2023, 35 per cent wanted a cap on rent prices while a further third (33 per cent) would like to see stamp duty relief extended to the first £500,000 of a property’s value.
Through the report, Santander called on the industry and government to think radically to ensure young people's dream was “kept alive”.
It said the government and industry needed to think about backing new lending models to help those without family support to raise a deposit, more flexibility in lending affordability criteria, and a better use of existing housing supply by encouraging greater circulation of homes.
