Half (47 per cent) of non-homeowning employees in the UK do not believe they will ever be able to afford to get on the property ladder, despite home ownership remaining an aspiration for 65 per cent of them.

The research from Close Brothers revealed that a quarter (27 per cent) of UK employees are spending more than 50 per cent of their monthly income on housing costs, while 10 per cent are spending over 70 per cent. One in eight employees claimed that their housing costs were unaffordable, while this figure increases to one in five when looking specifically at millennials.

According to figures from the Office for National Statistics (ONS), average house prices in Britain have rocketed by more than 270 per cent over the past 20-years, causing the average age of a first-time buyer to increase by at least eight years since 1997.

However, Close Brothers highlighted there is “potential for improvement” as house price growth is currently at the lowest annual rate since September 2012 and, if growth continues to “stagnate” while wages improve, homeownership could become a more “feasible ambition”.

Furthermore, 40 per cent of employees claimed to not know where to start when it comes to getting onto the property ladder, emphasising the importance of offering employees the right advice to help them reach their long-term savings goals.

Two thirds of employees said they would expect to see their housing costs increase in the event of an interest rate rise. Of those, 65 per cent said it was because they have a variable rate mortgage. The data found that millennials are most exposed, with 76 per cent stating that their housing costs will increase if interest rates were to rise.

Commenting on the findings, Close Brothers head of financial education Jeanette Makings said: “Housing is a key area of financial wellbeing, and it’s heartening to see that employees record a relatively strong score here.

"However, there seems to be a gap between perception and reality. While there’s confidence around affordability, a huge proportion of people’s salaries are going on housing costs. This makes saving for the future more difficult and contributes to the scale of uncertainty when it comes to taking the first step onto the property ladder.

“All of these issues can be improved by a solid financial education programme, supporting employees in their ambitions be they short or long term. Employers can help employees in this respect, improving their financial health and creating a happier and more productive workforce.”

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