THE future housing market could “come to a standstill” as young people increasingly believe they may never own their own home, a report has warned.
The British love affair with home ownership is showing signs of cooling with almost one in five young people saying they have no desire to own their own home.
The report by the Halifax warns that a potential collapse in the number of first-time buyers will have a knock-on impact on those trying to move up the property ladder.
If some existing home owners are unable to trade up, the market will be brought to a “standstill”, the report said.
The findings come after figures released this week showed someone trying to get on the property ladder faces paying 10.5 per cent more than a year ago.
The figures fuelled concerns about “runaway train” house prices, with property values across the UK having leapt 9.1 per cent over the last year to reach a new average high of £253,000.
Halifax’s Generation Rent report found almost half of people agree that Britain will become a nation of renters within the next generation and 46 per cent think the country is becoming more like other parts of Europe, where long-term renting is seen as the norm.
Experts believe house prices are being pushed up by the Government’s Help to Buy scheme, which Ministers say helps buyers move up the housing ladder but critics argue inflates prices without doing enough to increase the supply of homes.
Craig McKinlay, mortgages director at Halifax, said: “We may be heading towards the point where the aspiration to own a nice home will be replaced by the aspiration to simply live in one.
“It seems that people are now beginning to accept a lifetime of renting and this would not only change the way the property ladder looks in the future, it could even bring into question whether or not it will exist at all for some people.”
The report found that for those renting, saving for a deposit is getting harder. The cost of renting is now on average £1,488 a year higher than owning.
Housing expert Professor David Robinson, of Sheffield Hallam University, said young people, hit hard by the recession, were pessimistic about buying for pragmatic reasons.
He said renting worked for some but, for many the reality is poor housing, rising rents and an imbalance of rights between tenants and landlords - unlike the more regulated rental sector in Germany where rent rises are controlled.
“The private rented sector is highly variable but it is fair to say it has more than its fair share of problems. One third of all accommodation in the sector fails decent homes standards. There is evidence tenants are afraid to challenge landlords regarding poor conditions for fear of eviction.
“There is an urgent need to improve conditions and make it a more secure situation that better meets the long-term needs of tenants.”
Emma Price, 24, from Bingley, who has been renting for six years, wants to buy with husband James but cannot afford.
“James is an engineer and has been made redundant twice. We are trying to save but I would be worried about interest rates rising if we bought. I don’t want to be 40 with kids in a rented house.
A tenant, 42, who asked to remain anonymous, moved from his West Yorkshire flat after his landlord threatened to increase the monthly rent from by £200 to £650.
He said: “He got greedy so I gave notice to leave. Five months later the property remains vacant - that is karma for being greedy.”