New research from Castle Trust, the UK’s leading equity loans and property investment provider, reveals that 4.1 million adults have given up on ever owning their own home. 1.8 million of these people are aged 25 to 44.
Only one in seven adults not currently on the property ladder believes they will buy a home before they are 30.
Of those still planning to buy their first home, 53% intend to raise their deposit through savings accounts – despite the poor returns. Around 12% will borrow from parents; 5% intend to ask their grandparents for money and 9% are waiting to receive an inheritance. One in four don’t know how they will raise their deposits.
Sean Oldfield, Chief Executive Office at Castle Trust said:
“The biggest challenge facing those who want to buy a home in the future is finding a way to save a deposit which keeps pace with rising house prices. The savings market is offering desperately low returns – even the best products struggle to get above 2% – and that is before tax is deducted. The Halifax House Price Index, by contrast, has risen by 7.8% during the last 12 months alone. Independent research indicates that 1 in 5 would be interested in saving for a deposit with an investment linked to house prices, if such a product existed.“
To help people address this issue, Castle Trust offers investment products that are all linked to the Halifax House Price Index (HHPI). Castle Trust Housas are a low cost and tax-efficient way to get exposure to the housing market.
Over the last 30 years, the average cost of a home for first time buyers has increased by 480% (5.8x) – an investment in consecutive 5 year or 10 year Growth Housas would have increased in value by 933% (10.3x) or 1039% (11.4x) respectively.
As well as offering an investment vehicle to help people save for a deposit and hedge against house price increases, Castle Trust has also launched a free online calculator that enables people to forecast how much they may need to save as a deposit for a future purchase. The calculator can be found at www.castletrust.co.uk/calculator/.
Research findings – the lost generation
Of those people aged 18 – 24 who are not yet on the property ladder, Castle Trust’s research reveals that 40% expect to have to wait until they are 31 or older before they do this. Among those aged 25 – 34, around 11% expect to have to wait until they are over 40. Sadly, for those people aged between 35 and 44 who don’t already own their own home, 33% (1.2 million) think they have missed out permanently.
Over half of those struggling to get on to the property ladder cited raising a deposit as the key reason (53%). 38% said it was because they don’t earn enough whilst a further 21% said that they would not be able keep up with their mortgage payments. 20% said they are prevented from buying their own home because their credit rating is not good enough to qualify for a mortgage.
Sean Oldfield continues:
“The failure of the young to break into the housing market has some very serious social implications. Older generations know this and want to help – many have the resources to do so. Castle Trust offer a range of solutions to address this crucial issue.”
Minimum investments in the Castle Trust Housa are from just £1,000 and investments of up to £50,000 per person are protected by the Financial Services Compensation Scheme.
Growth Housas are available for 5 and 10 year terms and provide investors with either 150% (5 year) or 170% (10 year) of any increase in the HHPI. Since launching in October 2012, the Growth Housas have delivered growth of 11.8% (5 year) and 13.4% (10 year). The Income Housa, which is available for 3, 5 and 10 year terms, has delivered capital growth of 7.9% in addition to an annual income of between 2% and 3% (depending on the term) . Unlike property funds, there are no upfront or ongoing management fees.
Last week, Castle Trust launched its Protected Housa, which is a pure growth investment which guarantees to track any rise in the Halifax House Price Index during its five year term. Investors who hold the Protected Housa to its five year maturity will enjoy full capital protection. If the Index is lower after five years, investors are guaranteed the return of 100% of their original investment.
For further information on Castle Trust’s Housas, call 0845 650 6294, or visit www.castletrust.co.uk/new-trackers/