Getting On To The Property Ladder - Challenges Facing First-time Buyers
The challenges facing today's first-time buyers have arguably never been so tough
. While previous generations expected to get onto the property ladder with relative ease, it is now widely believed that home-ownership is an unobtainable goal for young people in the 21st century. But what are the difficulties facing today's prospective property owners, and why does so much negativity surround their situation?1. The changing role of social housing
Social housing was originally conceived as a way of encouraging aspiration and helping young people take their first steps towards owning their own home. By offering lower rates of rent and assured tenancies to new families, previous governments looked to facilitate greater social mobility through affordable housing.
The recent changes to social housing, including the introduction of new flexible tenancies, suggest that affordable housing is meant to serve a different purpose in the 21st century. With declining availability and greater demand for affordable housing, priority has been given to those in the greatest need. Removing mandatory life tenancies and encouraging the better off to move out is part of this strategy to make sure social housing supports the most vulnerable. At the same time, it closes off social housing as an option for those looking to get on to the property ladder.
2. Higher mortgage deposits
In the past, it was common for lenders to offer mortgages of 100%, making home ownership a lot more accessible. Past financial difficulties, though, have led to banks requesting deposits of between 10-25% of the house price. While protecting the banks from risk, this change has only put greater pressure on first-time buyers. Saving up such a substantial amount of money takes a considerable amount of time, and it is likely that, without the financial support of parents, it will simply prove too much for those just starting out.
3. Mounting student debts
Student debt is set to increase considerably as tuition fees continue to rise. With recent graduates possibly facing upwards of 40,000 of debt, will they see the burden of a mortgage as one step too far? Of course, it's impossible to tell how far this will impact on the desire for home-ownership, but it's likely that the prospect of even more debt will see many postponing the move into property.
These are just some of the difficulties facing first-time buyers. But what are the alternatives? Obviously, renting is an attractive option, and can offer greater freedom from the instabilities and uncertainties of the housing market. Some commentators even believe that the future will see a minority of people owning their own homes before middle-age, following the example of countries such as Germany.
At the same time, though, support still exists for first-time buyers, with a number of schemes available which are designed to make home-ownership an attainable target. Housing associations provide a number of options, including shared ownership and part-buy, part-rent agreements, for those who still see property as an investment in their future. The prospects, then, for young people are not altogether bleak, although greater flexibility is needed in responding to the changing nature of society.
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