Britons Struggle to Save for Home Down Payments as Prices Surge
Most Britons between the ages of 20 and 45 who want to buy a home aren’t able to save money to put towards a down payment, excluding them from the strongest U.K. property market in 3 1/2 years.
Those who say they’re unable to save anything for a deposit on a home rose to 57 percent from 42 percent a year earlier, according to a survey by mortgage lender Halifax. One in five U.K. residents between the ages of 23 and 27 has no interest in buying somewhere to live, the survey of more than 8,000 people showed.
Record-low interest rates, credit-boosting programs and a lack of supply are fueling price increases, making it harder for first-time buyers to make a down payment. While the government’s Help-to-Buy plan assists homebuyers with deposits, encouraging higher loan-to-value mortgages in the current market is “extremely reckless,” Citigroup Inc. Chief Economist Willem Buiter said this month.
“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,” Halifax Mortgages Direct Craig McKinlay said in the report. Halifax is a unit of Lloyds Banking Group Plc. (LLOY)
U.K. house prices climbed 7.2 percent last month to an average of 262,291 pounds ($441,000), the largest annual gain since September 2010, Acadata said in an April 11 report.
A preference for renting in Britain, where home ownership has long been a goal for most people, could create better labor mobility and could improve economic growth, Halifax said in the report. It might also lead to fewer homes than necessary being built because demand for properties would be less stable, the mortgage provider said.
Homeownership in the U.K. is falling for the first time in more than a century, according to government statistics. The number of people who live in their own property declined to 64 percent in 2011 from 69 percent in 2001.
Renting a home in the U.K. now costs almost 1,500 pounds a year more than owning one, according to data compiled by Halifax. Average rents have increased by more than 1,200 pounds since 2009, while the cost of owning is relatively unchanged, it said.
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