Ruth Davidson: This is how to solve the first-time-buyer crisis

Résumé détaillé

As first time buyers struggle with affordability, multigenerational mortgages could become more popular in the UK ...

We all know it is tough out there for young people to buy their first home – much tougher than it was even 20 or 25 years ago. But it is worth reminding ourselves of some of the issues first-time buyers face.

Firstly, average house prices have grown twice as fast as average wages over the last 25 years. At £294,000 the average home in England now costs more than seven times the median salary. The average deposit for a first-time buyer now tops £60,000.

I don’t know many folk with a spare £60,000 kicking around – especially not ones in their twenties. So it’s no surprise that more than half of all first-time buyers now rely on financial help from the bank of mum and dad to pull together a deposit.

Even with help, this high barrier to entry continues to change the demographic of homeownership. In 2020, the average first-time buyer was in their late twenties. Today, they are 34.

At the other end of the spectrum, it’s a different story. The proportion of over-65s owning their own home has risen to 79 per cent – so maybe it’s time to think differently about the housing and mortgage market.

Two potential solutions beginning to find favour are intergenerational and multigenerational mortgages.

Common to Japan – but vanishingly rare here – both can help pool resources, increase lending and reduce costs within families.

The two concepts may sound similar, but they describe very different products and situations.

An intergenerational mortgage is an ultra-long-term loan where different generations of the same family don’t necessarily live in the same house, but the expectation is that, on death, both the property and the outstanding debt pass down the line.

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