Why are so many young people in Britain struggling to buy a home?
UK house prices have risen dramatically over the last 40 years, while homeownership among younger adults has fallen.
But Britain’s housing crisis isn’t simply about not building enough homes.
In this video, I look at another enormous factor: mortgage credit.
Over several decades, lower interest rates, financial deregulation, higher income multiples and longer mortgage terms dramatically increased the amount buyers could borrow.
When more purchasing power competes for a constrained supply of housing, some of that additional borrowing capacity can ultimately become reflected in higher house prices.
The result?
🏠 Falling homeownership among younger generations
💷 Larger mortgages and longer mortgage terms
📈 House prices rising much faster than incomes
👨👩👧 Growing reliance on the Bank of Mum and Dad
🔑 Family wealth becoming increasingly important for first-time buyers
🏘️ More people remaining in the private rented sector
💰 A widening divide between those who already own property and those trying to buy it
I also look at Help to Buy, Shared Ownership and whether policies designed to help first-time buyers can inadvertently increase purchasing power without solving the underlying shortage of homes.
Britain clearly needs more housing.
But I think we also need a much bigger conversation about the financialisation of the UK housing market and the role mortgage credit has played in house-price growth.
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Do you think Britain’s housing crisis is primarily caused by:
🏗️ Not building enough homes?
💷 Too much mortgage credit?
📈 Planning restrictions?
👨👩👧 Growing wealth inequality?
🏠 Or a combination of all of them?
Let me know below — I’m interested to hear different perspectives.
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Credit to : British Home Group
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