Research of over 2,000 potential/existing first time buyers for the Yorkshire Building Society found that despite market conditions, three out of four people who had yet to purchase their first property aspired to own their own home.
45% of those who bought their first home in the last year said they felt property was a good investment, and 49% were prompted to buy as they felt renting was a waste of money. 49% of potential first time homeowners agreed with this statement but 5% more said they saw property as a good investment (50%).
First time buyers who bought prior to the fallout from the credit crunch are less likely to agree as arguably they had easier access to credit and fewer financial worries.
With a deposit of approximately £26,000 needed to buy the typical first home, potential first time buyers are now making lifestyle changes in order to save up. In addition, the number of first time buyers who were able to buy as they felt it was ‘the right time for them’ has fallen (from 13% to 6%) whereas those who have needed help from family and friends has more than doubled from 4% to 10%.
60% of those who climbed onto the housing ladder in the last year say they set up a regular savings account specifically for their deposit. This is a larger proportion than those people who bought five years ago (41%) and also those with aspirations to buy their first home (41%). The Yorkshire Building Society says this suggests that while financial prudence was less critical pre-credit crunch, the key to successfully buying your first home at the moment is sensible financial planning.
Potential first time buyers are also looking to save more in other ways and 8% are cutting back on luxuries such as nights out, with 5% even taking on additional overtime or part-time work.
When it comes to financing a first home, prudent financial planning continues to be at the forefront of people’s minds. The largest proportion of recent first time buyers chose the security of a fixed rate product (51%), with others seeking to take advantage of low interest rates by taking out a tracker (12%).
Chris Smith, group direct mortgage manager at Yorkshire Building Society, said: “In the last five years mortgage activity in general has more than halved, and today’s first time buyers are facing a squeeze on incomes and pay rates that are not keeping pace with inflation. However, it’s encouraging to see the proportion of first time buyers has actually begun to increase in this period and more people are seeing home purchase as a prudent financial decision.
“First time buyers are vital to the housing market, and here at the Yorkshire we are doing our best to help. In the first six months of 2012, we increased our overall net mortgage lending compared to the same period last year, with approvals to first-time buyers up 32%.”
