90 per cent of households want to be homeowners

The HSBC survey of non-homeowners confirms that:

• 78% of all non-homeowners, who have never bought before, aspire to be homeowners.
• 86% of non homeowners 18 - 24 year olds aspire to be homeowners.
• 84% of non homeowners 25 - 34 year olds aspire to be homeowners.

The above statistics imply that over 90% of all UK households (homeowners and non homeowners) want to be homeowners, compared to 68% who have actually achieved it.

The HSBC survey also reveals:

• Only 19% of aspiring homeowners expect to purchase within the next 5 years.
• 45% do not expect to be able to purchase a home ever.
• Among the more optimistic younger age group (18 - 24 year olds) 22% expect to purchase within 5 years. A still sizeable 21% do not expect to ever be able to purchase.

The HSBC survey asked the aspiring homeowners what key reasons were holding them back from house purchase:

• 69% cited "raising the required deposit"
• 59% cited "insufficient income to support the mortgage"
• 27% said "concerns over unemployment"
• Only 12% said "concern over future falling house prices" was a factor holding back house purchases.

The current average FTB house price of £136,842 is 6.6 times a young single persons average earnings of £20,654. With lenders across the industry typically reluctant to lend more than 4 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 FTB 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. It is thus not surprising that 84% of young FTBs are buying with assistance, mostly from parents. This compares to 38% in 2005.

Stuart Beattie, HSBC's head of mortgages, comments: "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.

"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."