Wouldn’t it be nice if, for a change, we gave you a good bit of news regarding finances? Something that made you all positive and glowing and excited for the future? Believe us, we try our upmost to find positivity when we scour the financial news outlets and markets, and as always, we’ve come up with nothing in the slightest that will raise a smile to the miserable faces of the Great British people.
Instead we bring you another disheartening article that highlights just how tough it is out there.
This time it is to do with houses and the blatant unaffordability of properties in the country at the moment.
According to latest figures, even the cheapest homes on the market in the least-sought after areas are now unaffordable for most people in work. Around forty-two per cent of the population (even those that have the advisable ten per cent deposit) still don’t have enough money to purchase their dream first home, despite many working all the hours that they can and giving up a lot of luxuries to try and save.
Go back twenty years and the majority of 24-35 year olds would, with the right amount of saving, have been easily able to buy a home in their first choice location or where they grew up. They would do this by borrowing around 4x their income and more often than not they would be accepted first time after requesting a mortgage.
Fast forward to this generation, however and things look remarkably different – and not in a good way. In 2018, only around 61 per cent of people will realise their dream of home ownership with the figure being considerably worse in the capital.
Despite mortgage rates slumping to historic low levels and other Bank of England rates being favourable, the stark reality is that house prices are simply too high for people to even contemplate getting a mortgage.
As it stands, house prices are around 5.5x times a person’s median earnings, meaning that people no matter how hard they try, simply cannot afford a home. The above figure is based on property in less-sought after areas but where property is in demand, this figure can stretch to nearly 7x that of someone’s earnings.
Unless house prices start to take a tumble, there seems to be no way to get more people on the property market. Calls have been made for property taxation changes as many people argue that many older people are put off getting smaller properties and cashing in on their existing larger property because of the hassle that comes with the downsize and all the tax that consequently would be owed. Similar pleas to the government for changes to stamp duty have also been called for to get young buyers moving on the ladder again.
As of yet, nothing has changed. But, unless something does, the country is heading for a brick wall.