According to research from the Home Builders Federation (HBF), the level of homeownership in England reached its apex in 2003 at 71% of the population, equal to around 14.7 million households. However, this fell to 64.8% in 2024.
The HBF said the population growth means that while the number of home owning households rose to just over 16 million, the drop in the percentage means that there are over one-and-a-half million households that would be homeowners if 2003 levels had been maintained.
The report noted that the fall in homeownership has impacted all age groups – barring the proportion of those aged 65-plus, which has increased by 540,000 as wealth “becomes increasingly entrenched”.
The biggest drop has occurred in 35-44-year-olds, which would have had an additional 800,000 home owning households.
The HBF said looking at other age brackets, those aged 25-34, 45-54 and 55-64 have all seen drops of approximately 500,000 in the 20-year period.
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Homeowners aged 16-24 have contracted by around 50,000.
The report said: “The availability, accessibility, and affordability of mortgage finance play a decisive role in determining whether this demand can be realised in practice. A growing number of structural barriers are preventing large sections of the population, particularly younger generations, from accessing homeownership.
“High deposit requirements, stringent lending criteria, stagnant wage growth relative to house prices, and elevated interest rates have collectively created an environment in which buying a home is beyond reach for many. Collectively, these factors have contributed to a pronounced affordability gap that threatens the sustainability of housing demand and undermines long-term market stability.
“If left unaddressed, these dynamics risk entrenching inequalities in housing access and diminishing social mobility. It is therefore imperative that policymakers develop and implement measures that support the demand side of the market through improved access to mortgage finance and targeted assistance for first-time buyers.”
Deposit is major barrier for FTBs
HBF said the first barrier was saving for a deposit and that most approved mortgages were for deals below 90% loan to value (LTV), with less than 10% of mortgages greater than this LTV tier.
This means that many prospective buyers will need to save at least a 10% deposit to buy a home.
Assuming a salary of £32,890, which is equal to monthly take-home pay of £2,267, rent and bills of £1,716 leave an income of £551.
With an optimistic assumption of a 50% saving of £275.50, it would take over seven years to save a 10% deposit of around £24,052.
Buyers would also have to contend with rises in house prices, rent inflation and other living costs, making saving even more challenging.
The HBF said this is further aggravated in London, the East of England, the South East and the South West, where buyers are taking up to 18.4 years to save in some instances.
‘Significant affordability gap remaining’
The HBF said there was a “significant affordability gap remaining” even when a 10% deposit is saved.
Assuming an average first-time buyer house price of £240,524 and a mortgage capacity of around £148,005, which is around 4.5 times salary, this leads to an implied affordability of £172,057. This means that there is an affordability gap of around £68,467.
The report found that only in the North East can the average earner in both the 22-29 and 30-39 age cohorts realistically buy a home, as the affordability gap is £1,531 and £20,359 for each age group respectively.
In London, the affordability gap is over double the national average at £275,000 and £220,000 for 22-29-year-olds and 30-39-year-olds respectively.
The HBF said the affordability struggles extend even to those on higher incomes, and the issue is “particularly acute” among earners under 30.
HBF urges govt to consider equity loan scheme
The HBF said the findings show there is a “need to intervene and assist potential first-time buyers onto the market” and called for an equity loan scheme.
It said it had long urged the government to consider a “replacement scheme to bridge the homeownership gap”.
The HBF said a 15% equity loan scheme for first-time buyers could be part-funded by a developer contribution, so they would pay a fee in return for buyers accessing the scheme.
The fee would be set initially at 1%, and the equity loan would be interest-free for five years.
