Home ownership in England will fall to 63.8 per cent in 2021, according to the National Housing Federation – the lowest level since the mid-Eighties.
David Orr, chief executive of the federation, which represents England’s housing associations, said: "With home ownership in decline, rents rising rapidly and social housing waiting lists at a record high, it’s time to face up to the fact that we have a totally dysfunctional housing market. Home ownership is increasingly becoming the preserve of the wealthy and, in parts of the country like London, the very wealthy."
Today, the typical first-time buyer has to save £26,346 to get a mortgage – the equivalent of 20 per cent of the value of their home – according to the Council of Mortgage Lenders. Four years ago, they needed only a deposit of 10 per cent.
House prices and rent are both predicted to rise by about 20 per cent over the next five years. This would mean the average tenant paying £1,152 more per year. Matt Griffith of campaign group priceout.org said young people in particular now faced the "toughest housing environment in decades. "Squeezed incomes from rent rises, inflation and stagnant wages are making saving for a deposit difficult.".
However, Mr Orr blamed builders, not banks, for the housing crisis. "Despite the overwhelming need to increase supply, house building has slumped to a 90-year low, plunging the country even deeper into the mire" he said.
Developers say they are willing and ready to build more homes. But they worry that they won't be able to sell them, because potential buyers will not be able to raise the finance - cycle, of restricted supply leading to high prices, which leads to curtailed demand, resulting in unwillingness to build.
"Millions of people across the country remain desperate for an affordable place to live, with more and more forced into expensive and unregulated private rented accommodation," said Campbell Robb, chief executive of housing charity Shelter.