Research points to older FTBs

Amanda Jarvis

April 7, 2006

The survey of FTBs ‘in waiting’ reveals that the average age by which they expect to buy their first home is 30 with almost 40 per cent not expecting to own a home until they are over the age of 30.

First-time buyers blame financial woes almost entirely for their struggle to get on the property ladder with 85 per cent pointing to rising house prices for pushing property out of their reach. Less than 15 per cent of the respondents to the survey cited non-financial reasons, with 3.8 per cent shunning the responsibility and commitment of home ownership and 10.9 per cent not yet having found the right property.

Financial hurdles
First-time buyers are typically facing two big financial hurdles to getting a foot on the property ladder as they struggle to secure a sufficient mortgage as well as raise a deposit. The survey reveals FTBs expect to spend an average of £153,029 on their first home, more than seven times the average earnings of £21,266 for the age group 22 to 29. Even with two people buying a property together, as over half of the FTBs questioned intend to do, salaries of this level would only secure a mortgage of around £116,000.

Deposit depression
In order to achieve the best mortgage deal, FTBs now need a deposit of approximately £15,000 and half of all the FTBs questioned cited this as a major financial hurdle for them to overcome. The majority of potential buyers have other significant financial commitments including rent and repaying debts such as credit cards, bank loans and student loans. As a result, one fifth are relying on help from parents to pay for a deposit, one in ten will use a bank loan or credit card and one fifth are resorting to a 100 per cent mortgage with no deposit.

David Bexon, managing director of SmartNewHomes.com, commented: “This research highlights the severity of the struggle that FTBs are facing. If this trend continues then we could face the very real threat of property ownership being a privilege reserved for only the very wealthy.

“New buyers now make up less than 25 per cent of the market having been edged out by spiralling house prices and limited supply of appropriate properties. The levels of debt that FTBs now have to take on to buy a home for themselves is dangerous. It is unrealistic to expect wages to increase sufficiently to match house prices so, unless average prices for lower priced properties slow significantly over the next few years, the plight of struggling FTBs is going to continue.

“The only viable solution is to increase the supply of affordable properties and the responsibility for this lies primarily with the government. They have the ability to allow housebuilders to produce more affordable housing and the means by which to create the infrastructure necessary to support such developments. Without significant and fundamental change at this level, first time buyers could go from a rare breed to a virtually extinct one.”

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