Number of first-time buyers reaches highest level for seven years, but pessimism reigns

7th April 2015


In 2014 the number of first-time buyers rose to its highest level for seven years at 311,500.

Despite this, the latest Generation Report from Halifax shows that many would-be buyers have an overly pessimistic perception of the market and their chances of getting onto the property ladder.

Improving economic conditions and the Government’s Help to Buy,  supported a higher number of first-time buyers to purchase their own home than at any point in the past seven years. From a peak of 402,800 in 2006, first-time buyer numbers fell as low as 192,300 in 2008.

Yet the fifth annual Generation Rent Report finds relatively little improvement in how potential first-time buyers view their chances of getting on the housing ladder.

Nearly 80% of 20-45 year olds believe banks don’t want to lend to first-time buyers, and 21% believe it is virtually impossible for first-time buyers to obtain a mortgage.

In this most recent survey the proportion of people saving for a deposit has dropped six percentage points. 43% are currently saving to buy a property compared to 57% who are not. This could suggest that more people are giving up on owning their own home and are instead accepting renting as a long-term option.

Halifax says there is a split between those who want to get on the housing ladder and those who say they don’t (13% in 2011 and 16% in 2015). This seems to hint at the UK becoming less obsessed with home ownership and may mean that lower levels of owner occupation become the new normal.

Meanwhile, 53% think the Help to Buy scheme has had a positive impact, but 39% don’t know or are undecided.

The three most cited barriers to homeownership among those who do not own a property are the size of the deposit (57%), high property prices (56%), and low income (53%).

London has the lowest proportion of homeowners aged 20-45 (39%) and the highest number of people in this age range who worry they will never own a home (82%).

Non-homeowners are currently prepared to save for average of 5.35 years in order to build a deposit whereas homeowners saved for an average of 3.6 years.

The average amount that non-homeowners can afford to save each week is now £33.35.

Craig McKinlay, mortgages director at Halifax, says: “The Generation Rent Report 2015 has revealed real changes in the first-time buyer market in the last year. While there has been an increase in first-time buyers in the last 12 months, at the same time there is also a growing group of young people who believe they won’t be able to get a mortgage. This difference between the reality and their perception needs to be addressed urgently if we are to prevent people from giving up on getting on the housing ladder.

“Homeownership is never going to be the right choice for everyone but we all have a right to the opportunity to own a property. We can educate people about the mortgages that are available to them, but there is still the underlying issue of needing to build more affordable homes. In order to tackle the shortfall in house building there needs to be a long-term commitment to building more new homes in the right locations.”

Shelter’s director of communications, policy and campaigns Roger Harding adds: “Even with interest rates at historic lows, sky-high house prices mean millions are still locked out of homeownership.

“For the first time in decades, young people today are facing worse prospects than their parents because successive governments have ducked the question of how to fix the housing shortage. House prices have now shot up to ten times the average wage, leaving generation rent left with two alternatives – either carry on living with mum and dad, or pay out dead money to landlords.

“And with prices still on the rise, it’s no surprise so many young people feel their dreams of owning a home are slipping out of reach. The only way to give generation rent any real hope of a home of their own is for politicians to deliver a big and bold plan that will finally deliver the affordable homes we desperately need.”

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