The UK could be set for a lost generation of homeowners with more than half of those under 40 set to be renting homes from private landlords in 10 years time, accountancy giant PwC has predicted.
In its UK Economic Outlook report PwC suggests that house prices will rise at an average of 5% a year over the coming decade and that the average home will cost £360,000 by 2020.
As such the proportion of owner occupiers will decline from a peak of 70% in the mid-2000s to 60% in 2025.
With first-time buyers typically having to find a deposit of 18% to secure a mortgage PwC predicts that the average deposit would stand at £64,800 in 2020.
Richard Snook, senior economist at PwC, said: “Driven by a decade of soaring house prices before the financial crisis and lower loan-to-value ratios post-crisis, the deposits needed by first time buyers have risen significantly.
“As a result, a generation of private renters have emerged and this will increasingly be the norm for the 20 to 39 age group.
“There is also a rising dichotomy in the market between those – mostly older – households who own outright and those – mostly younger – households who still have a mortgage or rent to pay.”