Going home to roost

Meet the property refuseniks. As house prices take yet another lurch upwards - and interest rates rise again - a new "can't pay, won't pay" generation is emerging who are refusing to saddle themselves with impossibly high mortgages.

First-time buyers are rapidly disappearing from the UK property market, which is increasingly sustained by a mix of remortgagers and buy-to-let merchants. Nationwide building society revealed last week that the number of first-time buyers entering the market is at a 20-year low, saying that the market is largely driven by homeowners trading between themselves.

So what are the young property refuseniks doing instead? The buy-to-let brigade are convinced that the excluded will fall into their arms, sustaining a curious logic among the new landlords which says that as prices rise, their investment is all the safer as the priced-out young will have to rent from them instead.

But will they? In what may be the beginnings of a social revolution that could turn the clock back on a half century of increasing home ownership, more and more young adults are choosing to remain living with their parents. And they're not just delaying a purchase - they say they are never going to buy.

They defy the conventional wisdom among planners which dictates that the UK must build for a predicted growth in single-person households. What instead may happen, is a surprise comeback of the extended family.

Analysis by Skipton building society published last week suggested that the number of extended family households in the UK encompassing three generations - grandparents, parents and children - may well treble over the next 20 years.

The renaissance in communal living arrangements is being driven on both sides, from indebted youngsters to hard-pressed pensioners, says Skipton.

"The high cost of property, and the impact of graduate debt, are delaying first-time buyers entering the market by three to four years, resulting in many staying at home," it said.

Meanwhile, longer life expectancy coupled with pension under-funding mean that surprising numbers of grown-up children are making what Skipton calls "the ultimate sacrifice" and inviting their elderly parents to live with them.

Many young adults are refusing to buy the philosophy of home ownership, as our case studies reveal. They're not staying at home to enjoy free meals and low bills, but because, like Mandy Charles, they've seen their friends and colleagues "spiritually and emotionally damaged" by the mortgaged house buying process.

Even those working in the lending business, such as Helen Richardson, are refusing to leap into the market if the cost means long commuting times and silly prices for unattractive properties.

Some, such as Ed Monk, feel they are being put under intolerable pressure to jump on the property bandwagon, however fragile their personal finances.

At the other end of the scale couples are jumping off the ladder. These include the Elsons, who are selling up in Bristol to work for VSO instead, in what they call one of the "most liberating" things they have ever done.

But others say that it is unlikely the British will ever end their love affair with home ownership.

Professor Paul Webley, an economic psychologist at Exeter University, believes the drop in first-time buyers is just a blip. Young people will continue to aspire to owning their own home.

"The main reason these young people have not yet bought, or chosen, to sell up is still based on their economic situation - they either stand to make, or save money, from their decision," he says.

Professor Webley says our obsession with owning property is down to a culture of security that emerged after the Second World War.

For almost 40 years property was the surest bet, with prices rising continuously until the late 1980s, and until Miras - mortgage interest relief at source was scrapped in 2000 - owning had the added benefit of tax relief.

"We had a major property crash in the early 1990s but it would take a dramatic event, followed by a sustained drop in house prices - as we've seen in Japan - to really change attitudes. If you don't own, you are still considered a second-class citizen. Owning a home still seems to define who we are," he says.

Renting is a waste of time

Journalist Ed Monk lives with his parents in Headcorn, Kent. He feels there is too much pressure on young people to get on the property ladder, and, at 23, wants to wait until he feels comfortable with the idea of owning.

"Renting can be a waste of time because it's not much cheaper than mortgage payments.

"People have talked about falls in house prices but I can't see that happening in areas within reasonable distance from London, which is where I would need to move to."

At the moment Ed, pictured with his mother Alison, is happy to split his time between his parents and his girlfriend's flat in north London.

"A lot of people I know have rushed to buy. Some have moved in with partners quicker than they would have done.

"I'll probably save money with my circumstances at the moment, but it's not much fun commuting when you are required to occasionally work into the evening, or start early. Living out of a bag isn't much fun."

Off the ladder

It is not just would-be first-time buyers who are opting out of property.

Some property owners are stepping off the ladder. Designer and former financial adviser Dominic Elson, 38, and wife Beth, 31, sold their five-bedroom Bristol home in March to spend two years on a fair trade VSO placement in Indonesia. "Selling it was the most liberating thing," said Dominic.

"I used to wake up at 2am wondering what else I had to do to maintain the house. Now all we have to worry about is changing a light bulb."

"We considered renting out the house but I don't really trust a letting agency. I've made a lot of money out of property - more than in a regular job. Now we have the chance to put something back."