Report: Affordability for first time buyers

By: Adam van Lohuizen  Published: February 2015


It is now widely accepted that we have a desperate housing shortage in England. Each year, we build at least 100,000 fewer homes than we need and the extent of the housing shortage only increases. With this shortage has come very high house prices, making it difficult – and sometimes impossible – for first time buyers to become home owners. This research demonstrates how affordability for first time buyers has changed over the decades from 1969 through to 2013, how first time buyers have paid for the rise in house prices, and how this has changed first time buyers themselves.

Summary

Over the decades since 1969, house prices for first time buyers have increased by 48 times, far out-pacing incomes which have only grown 29 times. If first time buyer house prices and incomes had increased at the same rate over this period, first time buyers would be spending 30-40% less to own their home than what they actually spend today. The strong rise in house prices has meant that first time buyers now need to save much larger deposits and borrow more, relative to their income. In order to afford this, first time buyers are now older, and are earning more than those on an average income.

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