16 Skyline | Edition 7 | Winter 2024
Paul Broadhead
Head of Mortgage & Housing Policy Building Societies Association
House Price to Earnings Ratio
Source: ONS
10 9 8
House price to earnings ratio
Major Barriers to Property Purchase
Source: BSA Tracker( Access to a large enough mortgage / access to a mortgage at all)
Percent of responses
7 6 5 4 3 2 1 0
1967 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023
80 % |
Repayment Affordability |
Raising Deposit |
Mortgage Access * |
70 % |
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|
|
60 % |
|
|
|
50 % |
|
|
|
40 % |
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|
|
30 % |
|
|
|
20 % |
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|
|
10 % |
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|
|
0 % |
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Jun-08 Dec-08 Jun-09 Dec-09 Jun-10 Dec-10 Jun-11 Dec-11 Jun-12 Dec-12 Jun-13 Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Jun-16 Dec-16 Jun-17 Dec-17 Jun-18 Dec-18 Jun-19 Dec-19 Jun-20 Dec-20 Jun-21 Dec-21 Jun-22 Dec-22 Jun-23 Dec-23
The housing market is broken. Whilst there are many different factors contributing to this, the critical reason in my opinion is that would-be first-time buyers cannot afford to buy a home of their own, which is essential for a properly functioning housing market.
Whilst it has always been expensive for people to get onto the property ladder, it is now probably the most expensive it has been in the last 70 years( see chart alongside).
Today, it is both the affordability of buying a home and the cost of owning a home which is challenging for first-time buyers. The sizeable deposit generally required to get on the property ladder has been a barrier to homeownership for some time. However, the BSA Property Tracker Report shows that the interest rate hikes since December 2021 have led to affordability of mortgage repayments being cited as the biggest challenge for would-be first-time buyers( see chart alongside).
Building societies have a strong track record of providing innovative solutions to support those taking their first step onto the property ladder and are responsible for around one-third of first-time buyer mortgage completions. But the ability to become a homeowner is increasingly dependent on either the so-called Bank of Family or having two incomes that are higher than average.