More than 2 million households have been left behind by the credit crunch

Over 500,000 UK households a year have failed to move onto or up the housing ladder since 2009, according to new analysis from Savills

The report, which compares transaction levels in an extended period running up to the peak of the market in 2007 and post credit crunch levels, shows a shortfall of 527,000 transactions a year. Of those excluded from market activity through lack of credit, some 200,000 households a year would have been first-time buyers.

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Many of these ‘excluded households’ are unlikely to benefit from the strengthening property market or Help to Buy, according to the research paper, Bridging the Gap in Housing. Savills expects that the private rented sector will continue to grow by 200,000 households a year over the next five years.

The report notes:

As the economy improves and confidence returns to more parts of the market, we expect to see the increased transaction levels continue to be concentrated in higher value markets. The lack of savings or equity is likely to leave excluded households even further behind as house prices climb.

Many of those priced out of the owner occupier market may still aspire to own their own home like their parents before them, but face huge barriers that will not easily disappear.

The new excluded are unlikely to qualify for social housing yet their incomes are not high enough to take advantage of the market recovery. The average income of most of these households is below £45,000 which is the average income of those currently accessing Help to Buy.

Savills expects Help to Buy to support 400,000 transactions over its three year lifespan, but for the bulk of excluded households, whose median incomes fall below the £45,000 average incomes of those currently accessing the scheme, Help to Buy will not make a material difference.

According to Savills the median income of an ‘excluded household’ is £36,710 in the South of England, £25,410 in the Midlands and Wales, £22,662 in the North of England. In London the figure rises to £54,756.

This, they say, is a countrywide phenomenon although the biggest concentrations of excluded households are found in lower value markets. The north and south of England have suffered similar numbers of excluded households, with transaction shortfalls of 165,290 and 179,116 respectively.

Even in London, where the market has been buoyant relative to the rest of the country, transactions are down by almost 60,000 a year compared to the pre-peak norm, though this represents a smaller percentage of the total market.

Younger households are most affected, which is reflected in private rental trends. The biggest group of private tenants is aged 25 to 34, but the fastest growing group are in the 35 to 44 age cohort, a quarter of which are young families. More people are renting for longer and many ‘Generation Rent’ households will never become home owners.

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