Bank of friends and family: First-time buyers more reliant on help to get on housing ladder
First-time buyers are becoming ever more reliant on help from family and friends to get onto the housing ladder as growth in house prices has outstripped earnings for the last decade, new figures show.
Between April 2022 and March 2023, 36 per cent of recent first-time buyers – resident for less than three years – used gifts from family and friends to help buy a home, according to the Office for National Statistics (ONS).
A further nine per cent had relied on inheritance to acquire their first home, the figures showed.
Both of these were significant increases compared to 20 years ago, when just 20 per cent of first-time buyers relied on gifts from family and friends. Only three per cent had depended on inheritance.
Increasing reliance on family and friends means there has not been a significant increase in the average age at which people own a home despite surging house prices in the last decade.
House prices have outstripped income growth between 2013 and 2023 so that last year full-time employees could expect to spend around 8.3 times their annual earnings buying a home.
Even so, the average age at which someone owns their home has only increased to 36 compared to 35 a decade ago.
However, poorer households are likely to face ever greater difficulties getting on the housing ladder. The ONS noted that people who “do not receive financial gifts or inheritance at a disadvantage when trying to buy a home”.
The figures also showed that young people were leaving home later in the past, with the average age of someone leaving home rising from 21 in 2011 to 24 years in 2021.
A large part of this stems from soaring rent costs over the past few years. The average cost of new rental agreements has already grown by 18 per cent since the start of 2022.
Research from the Resolution Foundation suggests that rents could rise by as much as 13 per cent in the next three years.
Justin Moy, managing director at EHF Mortgages, said this would contribute to increasing house prices down the line. “Parents looking to use downsizing as a viable exit from the four-bed home to the two-bedroom by the coast will need to keep the family home longer, to keep a roof over their 20-somethings heads,” he said.
“This reduces the supply of family homes to the market, pushing prices even higher and more out of reach of everyone,” Moy continued.