Young people now priced out of property market

House and coins

Young people across the UK are finding themselves locked out of the property market, a housing charity has warned.

Research by Shelter found that it now takes first time buyers a decade of saving before they can afford to get on the property ladder. Single people have an average wait of 14 years to buy a property due to a lack of affordable homes.

Campbell Robb, Shelter's chief executive, said: "It shows the harsh reality that young people today are facing because of our shortage of affordable homes.

"These shocking results show that when it comes to saving up for a home of your own, things today just aren't what they used to be."

The Shelter data comes on the back of figures announced on 18 June by the Office for National Statistics, which showed that in the year to April 2013 the average price paid for a home by first-time buyers increased by 4.7%, outstripping the overall increase in house prices of 2.6%.

It means that during April 2013, first-time buyers paid an average of £179,000 for their first home, or £8,400 more than they did in April 2012. At £179,000, first-time buyers would need to raise 7.7 times the average annual salary in order to afford a home.

Shelter said young people are increasingly becoming trapped in the private rental market, where they face years of soaring rents, short-term lets, and unexpected letting fees.

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Robb added: "It's right that people work hard and save up if they want to own a home, but the government has to start meeting people halfway. Unless we see radical action to tackle our chronic shortage of affordable homes, the next generation of young people will find it even harder to find a place to call their own."

Stamp duty overhaul

Shelter's call for more affordable homes was welcomed by Nationwide Building Society. Stephen Uden, Nationwide's head of citizenship, said: "We have also called for the reintroduction of a stamp duty holiday for first time buyers and the complete overhaul of the stamp duty system. This would be fairer to those buying their first home and would also encourage second steppers to move, freeing up more homes for people starting out."

The government recently launched the Help to Buy scheme, giving assistance to buyers struggling to get on the property ladder.

The scheme is divided into two parts: an equity loan, introduced in April 2013, which gives those with a 5% deposit a 20% equity loan to buy a new-build home worth £600,000.

The second part of the scheme is a mortgage guarantee, to be introduced in January 2014, giving buyers with a 5% deposit a mortgage guarantee on any home, newly built or older, worth up to £600,000.

But Help to Buy has been criticised for potentially contributing to a new housing bubble, with the government propping up an ailing housing market and helping developers offload over-priced property rather than allowing it to fall more steadily back to a sustainable level.

Shelter has launched an online calculator for young people to help them calculate how long it will take to save for a home.