In 2014/2015 the majority of first time buyers, some 61%, were aged 25 to 34 and this was similar to 1994/1995 but between 1994/1995 and 2014/2015 the proportion of first time buyers aged 16 to 24 fell from 23% to 10%, while the proportion aged 35 to 44 increased from 11% to 20%.
The survey, from the Department of Communities and Local Government (DCLG) also shows that more first time buyer households were couples than single people, compared with 20 years ago.
The proportion of first time buyers that were single households halved from 29% in 1994/1995 to 14% in 2014/2015 meaning 80% of all first time buyers were couple households, a marked change since 1994/1995 when it was 63% and 2004/2005 when it was 62%.
The report suggests that this may be due to an increasing need for two incomes to be able to buy.
The analysis shows that among first time buyers that were couples, those with dependent children have increased the most from 20% to 31% and first time buyers had higher incomes and more help with funding their deposits than was required 20 years earlier.
Some 72% of first time buyers were in the fourth and fifth quintile income bands in 2014/2015, up from 62% in 1994/1995 and there was an increase in the proportion of first time buyers that had help from friends and family from 21% to 27% while those that used inherited money for their deposit increased by 3% to 10%.
Expectation to buy declined among private renters between 2013/2014 and 2014/2015, after a period of relative stability since 2006/2007. A breakdown of the figures show that in 2014/2015 some 57% of private renters were more likely to expect to buy property at some point in the future than social renters at 24%.
Since 2006/2007 the proportion of private renters who expect to buy a home has remained relatively consistent. However, there was a decline from 61% in 2013/2014 to 57% in 2014/2015.
There was no such decline in the proportion of social renters who expected to buy over the latest year. This was in large part due to the fall in the proportion of 25 to 44 year old private renters who expect to buy in the latest year.
Expectation to buy for 25 to 34 year olds in the private rented sector was relatively stable from 2008/2009 but the 71% of 25 to 34 year olds expecting to buy their own property in 2014/2015 signified a decrease from 78% in 2013/2014. A similar pattern was evident among private renters aged 35 to 44 years, with a decline from 68% to 60% in the latest year.
There were more older social and private renters expecting to buy than in 2010/2011. Among social renters, the proportion of 45 to 54 year olds expecting to buy increased from 15% in 2010/2011 to 24% in 2014/2015. In the private rented sector, the proportion of 45 to 54 years olds expecting to buy increased from 33% in 2010/2011 to 48% in 2014/2015.
Couples with dependent children were more likely to expect to buy a home than couples without children or single households and in 2014/2015 some 28% of all renting households who expected to buy a home in the future were couples with dependent children.
The next most likely household type to expect to buy were couples with no children at 19% and single person households at 18%.
Among renters not expecting to buy, two thirds cited affordability as the main barrier to home ownership. In 2014/2015, the proportion of people who felt they were unlikely to buy a home due to affordability was similar across the social and the private rented sectors, with 65% in the private rented sector and 66% of people in the social rented sector citing affordability as the main barrier to home ownership.
A minority of households did not expect to purchase a home because they preferred their current circumstances as renters. Some 9% said they liked it where they were and 1% preferred the flexibility of renting.
Renters considering applying for a mortgage increased slightly in the last five years. This was largely due to an increase outside of London. In 2014/2015 some 10% of all social and private renters considered applying for a mortgage, up from 8% in 2010/2011.
Outside of London, there was an increase in renters considering a mortgage application from 7% in 2010/2011 to 9% in 2014/2015 while in London it remained stable over this time. However, in 2014/2015 London renters remained more likely to consider applying for a mortgage at 12%.
The majority of households who went on to apply for a mortgage had it approved, and the rate of approvals increased. In 2014/2015 some 27% of households that considered applying for a mortgage proceeded to make a mortgage application, which had not changed compared with 2010/2011 when it was 26%.
The majority, some 80%, of those households that applied for a mortgage were given their mortgage while 20% were refused but the proportion of households that were refused had dropped since the 36% recorded in 2010/2011.
The main reason households did not apply for a mortgage was that they did not think their deposit was large enough, and this was unchanged from 2010/2011. Overall in 2014/2015 some 73% of households considering a mortgage application did not apply. Some 49% did not apply as they thought their deposit was large enough and 24% thought their application would not be approved, unchanged from 2010/2011.
According to Richard Connolly, chief executive officer at Rentplus, it is shocking that the number of first time buyers has plummeted by 300,000 over the last 10 years. ‘This throws into stark relief the dual crises of lack of housing supply and affordability in the UK,’ he said.
He pointed out that the report indicates that it is people at higher income levels, or are in the position to be able to borrow money from friends and family, who are able to purchase a home.’ Many are not as lucky. Lack of a deposit remains the main barrier to purchasing and this was cited by two third of renters who do not expect to buy and, more generally, fewer private renters expect to be able to buy a home, according to the findings,’ he explained.
‘The recent news that those aged between 15 and 35, may be the first to earn less than their parents’ generation means that affordable housing models are now more important than ever for democratising home ownership,’ he added.
He believes that the Government needs to recognise that Starter Homes will never be a solution that suits the UK population as a whole, because getting access to the deposits required and the salary to support a mortgage are huge inhibitors.
‘Mixed tenure solutions are therefore vital to ensure that the needs of many are met. Flexible tenures such as Rent to Buy can suit a number of lifestyles and circumstances and offer both time and credit worthiness support to make solid financial decisions that will encourage better financial planning for the future,’ he concluded.
