A survey from HSBC shows that 78% of all non home owners, who have never bought before, aspire to do so, 86% of those aged 18 to 24 want to buy and 84% of 25 to 34 years olds are in the same position.
According to HSBC this means that over 90% of all UK households want to own a home compared with 68% who actually do so.
But the research shows that only 19% expect to be able to realise their dream in the next five years and 45% do not expect to be able to purchase a home ever.
Among the more optimistic are the younger age group of 18 to 24 year olds, of which 22% expect to buy in the next five years but 21% do not expect to ever be able to own their own home.
Some 69% of those who took back in the survey said that raising a deposit is the main hindrance while 59% said it was insufficient income to pay a mortgage and 27% said they were worried about losing their job. Only 12% said they were concerned over future falling house prices.
The current average price of a home for a first time buyers is £136,842, some 6.6 times a young single persons average earnings of £20,654. With lenders across the industry typically reluctant to lend more than four times income, this leaves an affordability gap of 2.6 times income, equivalent to £53,700 or 39% of the house price.
In order to afford a 90% Loan to Value (LTV) mortgage, the maximum a standard lender will currently allow, a typical firs time buyer home earnings would have to be £30,800, 49% higher than current average earnings for a single young adult.
Even then, a 10% deposit of £13,684 is equivalent to 42% of this higher annual income, a major impediment to home purchase without external financial assistance, says the HSBC report.
‘Our study proves that the aspiration to be a homeowner continues to be exceptionally strong. Over 80% of young non-homeowners are aspiring to buy a home but are being prevented from doing so due to lack of affordable homes,’ said Stuart Beattie, HSBC's head of mortgages.
‘The key to helping buyers back into the market is to help them obtain the cash deposit that responsible lenders require before granting a mortgage. To this end both Government and private sector interested parties need to come up with innovative schemes to help aspiring FTBs. HSBC is committed to helping FTBs and is currently working on a number of initiatives that will help the FTB cause,’ he added.
