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Friday, April 18, 2014

Generation rent?

This article in the Western Mail graphically illustrates why the various Government schemes to help people get on the housing ladder are so important.

A lot of attention is being given to the impact of the UK Government's Help to Buy schemes on London and the South East of England, with claims that it will create a housing bubble. It certainly has not done so yet.

However, the biggest impact of these schemes (and the largest take-up) is outside of these areas. We cannot allow UK Housing policy to be dictated by the economy of the South East,  nor can we view these issues just through a London-centric eye. As reported here, three quarters of Help to Buy mortgage applications came from outside London and the South East and eight out of ten were from first time buyers. On average households are looking to buy homes worth £160,000, below the UK average house price of £247,000.
The paper reports that more than 30,000 people quizzed for a survey commissioned by Halifax bank said they accepted they will probably never be able to afford their own home without sacrificing years of financial hardship.

They add that nearly 50% of Welsh people agree Britain will become a nation of renters within the next generation, while one in five of 23-27 year olds have no desire to buy their own home. And yet despite people’s reluctance to climb the property ladder, figures released by the bank last month show buying a house is £124 a month cheaper than renting, making renting nearly £1,500 more expensive a year.

The paper says that these figures expose the largest difference in rent and mortgage prices since 2009, as rents rose by 18% in four years. But for a lot of young renters in Wales, it is simply impractical to consider investing in property because they cannot afford a deposit.

And if you think that those renting may be happy with that condition then there is a Shelter Cymru survey which shows only 15% are content to rent. And given the difference in costs illustrated above that is not surprising.
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