A 10 Year Wait for First Time Buyers!

by Mark Johnston

A 10 year wait for first time buyers!

Large deposits, strict lending criteria and the weak economy have stopped many people getting on to the property ladder. The range of mortgages available to first time buyers with deposits of 10 per cent or less has also shrunk significantly over the last half a year.

Recent research has shown that nearly half of all first time buyers believe it will take them at least 10 years to save for a deposit and that is not taking in to account any rise in mortgage lending or house prices.

The Royal Bank ofScotland (RBS) recently released new research that revealed that the rising cost of living has wiped almost £200 off the available income to service a loan or save for a deposit.

According to the Council of Mortgage Lenders (CML) house prices have almost doubled in the last decade therefore the average price of a first time property now stands at around £137,500, this makes the average deposit £27,000.

YouGov.co.uk, a market research agency, questioned around 2,000 adults currently in rented accommodation and around half of these felt that house prices are so high and mortgages so scarce that they will never be able to buy.

Rising rental prices has also put a strain on potential first time buyer’s finances, rental costs hit £725 in July 2012, thus making it hard to save.

Peter Gowers, chief executive of Safestore, a nationwide storage company, said “this shows the extent to which a large proportion of the British population is resigning itself to never owning their own home”.

Other research has stated that the despair of getting on the housing ladder is taking a morbid turn with 42 per cent of renters claiming their best hope of raising a deposit and therefore becoming a home owner is by an inheritance.

Some potential first time buyers also fear that if they do get a deposit together they will still not be able to afford the mortgage repayments but experts say that this is an unfounded worry as on average renters pay £876 more a year than the average home owner with mortgage payments.

It also seems that according to research from Shelter, the homelessness charity, one in five people aged between 31 and 44 who do not already have children feel forced to delay staring a family due to high house prices.    

Head of Post Office mortgages, John Wilcock, said “the average age of a first time buyer has been creeping up over the past 50 years”.

 In the 1960’s the average age of a first time buyer was just 24, current figures reveal that the average age of a first time buyer has risen to 35, up from 28 just a decade ago. Many believe that this is due to rising house prices and reduced levels of savings.

In conclusion, it seems that yet again radical action is needed to stop an entire generation being held back by some of the toughest market conditions seen in decades.

 

 



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