First home delay 'creates cycle'

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File photo dated 27/1/2014 of For Sale signs displayed outside houses in Finsbury Park, north London. Experts are warning that stronger curbs must be considered for the housing market amid fears that London is starting to show

Younger people who are not yet on the property ladder risk creating a future cycle in which their own children have a tougher struggle to become home owners, a report says.

The current generation of 25 to 36-year-olds, the traditional age group for first-time buyers, is split into "property haves" and "property have-nots" who face very different prospects, the research from HSBC suggests.

While younger people who have managed to get on the property ladder did so typically at 29, the "have-nots" do not expect to buy their first home before the age of 35, according to the report, based on a survey of 1,000 people in this age group as well as figures from various sources.

Researchers predict this six-year head start for those who are already on the property ladder could have a variety of knock-on effects for people throughout their lives - including the level of financial support they are able to offer their own children when they want to buy their first home.

The report, titled First Time Buyers: The New Property Path, suggests that those who have already bought a starter home will take their next step on the property ladder and buy a family home around the age of 36.

If those who are not yet on the property ladder see a similar time lag, they will be about 42 by the time they are living in a family-sized home.

With the current average age for a first-time mother being 28, the report said that many people will have either had their family before buying their first property, chosen to delay starting a family or decided to have fewer children.

Current property owners aged between 25 and 36 are likely to pay off their mortgage aged around 61, whereas the "have-nots" will be about 67 by the time they are mortgage free, the report said.

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It said: "Despite the planned increases to the state pension age, the average age people in the UK expect to retire is 65.

"This raises the issue of delayed retirement as well as them being unlikely to be in a position to gift their children money for property purchases."
The children of the "property haves" are likely to be in their early 30s by the time their parents have paid off the mortgage and will potentially have more of a chance of getting financial support from their parents, the report predicts.

Various studies have reported first-time buyers returning to the housing market in their strongest numbers in recent months since the financial downturn took hold, amid the launch of various Government support schemes such as Help to Buy.

But Office for National Statistics (ONS) figures have shown that more than 3.3 million 20 to 34-year-olds were living with their parents last year in the UK following a surge of one quarter since 1996, after higher hurdles to get on the housing ladder and the struggle to find a job left many in the younger
generation trapped in the home they grew up in.

Pete Dockar, head of mortgages at HSBC, said: "Home ownership continues to be an aspiration for the majority of young people.

"This study shows postponing their purchase has long-term implications not just for their future property ownership, but their ability to help their own children step on to the ladder."

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