Number of first-time buyers using gifted deposits falls
Just 7% of those using gifted deposits were first-time buyers between June 2016-July 2017, research from My Home Move has revealed.
That represents a 4.5% decrease in the space of two years when compared to the same period in 2014/2015.
Similarly gifted deposits used by investors fell by 2.5%, accounting for 4.1% of all transactions.
Doug Crawford, CEO of My Home Move, said: “What is particularly interesting is the drop in gifted deposits to first-time buyers.
“We know that affordability is a key issue for first-time buyers, particularly as 55% of them are looking to buy properties costing less than £150,000, which gives them roughly a 1% chance of finding a suitable property.
“With gifts to this group falling steadily, it does beg the questions as to whether this is reflective of a drop in the number of first-time buyers entering the market, or whether there are other factors in play.”
Overall use of gifted deposits decreased by just 4% in the same time period, indicating that those already on the housing ladder are in need of additional funding to purchase their next property.
Some 88.9% of all those purchasing using a gifted deposit were second-steppers or middle-movers, an increase of 8.7% between 2014 and 2017.
Crawford added: “We already knew that the main beneficiaries of gifted deposits were people that were already on the property ladder, but the data seems to suggest that these second-steppers and middle-movers are in more and more need of help to make it onto the next step.
“As house prices have risen by almost 18% in the timeframe that was analysed, it may be that people are struggling to accumulate enough equity from the home that they are in now to raise a deposit on their new property.
“The average property deposit is now close to £60,000, so it’s likely that the Bank of Mum and Dad are stumping up the additional funds needed to help their children into bigger properties.
“For now, it seems the Bank of Mum and Dad is still open for business, but with increasing house prices and stagnating wages, it’s unclear how much longer it will be open for.”