According to a study published by Hometrack, 28.3% of young working households in Britain are unable to get on the property ladder. The report has also looked at the price of buying compared to renting, and found that it costs 32% less to rent.

The report, ‘Can’t Supply: Can’t Buy – the affordability of private housing in Great Britain’ pointed to rising mortgage costs before and after the credit crunch coupled with strong house price growth as the main reason behind the high percentage of young households unable to afford to buy a home. The situation is also regional with London and the South West having the highest percentage of households in this bracket with 41% and 40% respectively. The report, which covers 2007, found that the mortgage cost to earnings ratio hit a new high of 34.5% compared to its previous peak in 1990 of 34.1%.

The report identified the importance of the private rented sector during a period such as this. With the cost of renting a 2-3 bedroom house at just 68% of the price of buying, the sector delivers to those households who are unable to become owner occupiers. The report highlights buy-to-let investors as having helped by boosting the private rented sector to almost three million homes and averting a situation such as the late eighties when house affordability was high but there was little to no rental sector.

Some concern has been raised with regard to the anticipated rise in rents as competition in the market grows. Author of the report, Professor Steve Wilcox, told PIN: “The percentage of young working households in Britain that can’t get on the property ladder (28.3%) is the highest I’ve seen in the last 4-5 years that I’ve been conducting the study. While house prices decline and mortgage costs continue to increase they offset each other. I therefore see no great change over 2008. Even if rents were to rise sharply, there is such a substantial gap between the cost of renting when compared to buying, that it would take some years of these rent rises and static house prices for it to become of any great concern.”