First-time buyer numbers last year rose to its highest level for seven years. However, the latest Generation Report from Halifax shows a growing disconnect between the reality of the situation for first-time buyers and their perception of the market.
Improving economic conditions together with high-profile government schemes such as Help to Buy, saw the highest amount of first-time buyers purchase their first home for seven years. From a peak in 2006 of 402,800 first-time buyers, numbers fell as low as 192,300 in 2008 before climbing back to 311,500 in 2014. Despite this 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.
2014 saw Halifax approving nine out of 10 first time buyer applications. Yet, 79% 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 supports the view that more people may be giving up on owning their own home and are instead accepting renting as a viable way of living in a nice home, in an area they want to live in and in the right size of property.
A new demographic split is appearing between those who want to get on the housing ladder and those who say they don’t (13% in 2011; 16% in 2015).
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 save for 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.
Meanwhile, 39% of 20-45 year olds are saving to buy two-bed properties (split between flats and houses: 18% versus 22%).
Craig McKinlay, mortgages director at Halifax, said: “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.”