Aldermore’s latest quarterly First Time Buyer Index has found that 22% of aspiring first time buyers are currently living with their parents.
Of those, 26% say they will have to live with their family for five or more years to save for a deposit, while 10% expect to live with their family for three to four years.
Aldermore says this situation is unlikely to get better as 31% strongly agree that buying a home is unachievable for them at the moment (a sentiment which is consistent quarter on quarter).
The report reveals that first time buyers living at home will cost parents an average of £416 extra a month on food and drink, petrol and electricity bills, equating to £4,996 a year. For those parents whose children have to live with them for five years, it would cost around £24,979 extra over the period, while for those who find themselves at home for three years, it could cost their parents around £14,988. This means that parents are having to pay an estimated total of £20.1 billion across the country each year to help their children get on the ladder. This massive spend has meant that 33% of parents have had to sacrifice saving for their retirement to cover the additional costs.
When it comes to living expenses, 63% of parents with children living at home (aspiring to get on the property ladder) have seen an increase in their monthly food and drink bills, at an average of £99 per month. A further 47% have seen electricity bills increase by an average of £95 per month.
With their child living at home, 31% feel like they don’t have the freedom they could have, while a further 31% believe the situation is negatively impacting the relationship with their child. Furthermore, 33% believe it is negatively impacting the relationship with their partner and 28% are waiting impatiently for their child to move out.
24% of aspiring first time buyers saying that still living with their parents makes them feel like a child. 17% feel like they are a burden to their family and friends, while 25% feel frustrated but recognise it’s a means to an end in order to buy their own home (24%).
When asked what the new government should do to better support first time buyers, 25% say it should address rising house prices, and this figure increases to 31% in London. 10% say that building more homes is the priority. 14% are keen for the government to relaunch the Help to Buy scheme as a priority, and 12% say bank and building society lending criteria should be adapted to better help first time buyers.
The research found that 91% of those hoping to buy their first home think it is difficult to get on the property ladder (compared to 94% in the previous quarter). Raising a deposit continues to be the biggest obstacle faced by first time buyers, with 35% believing this is a bigger hurdle than rising property prices (26%). Although 41% of Londoners believe property prices will prevent them getting on the ladder. 22% of prospective first time buyers are planning to use parental or family assistance for their deposit, this rises to 27% in London. The number planning to use their own savings to fund their deposit has risen to 23%, compared to 18% in the previous quarter.
Charles McDowell, Aldermore’s commercial director of mortgages, said: “First time buyers have a notoriously difficult time getting on the property ladder. Since saving an adequate deposit remains the biggest obstacle, more and more people have had to move back into the family home to boost their savings.
“Our report reveals just how difficult this can be to navigate, with real impact not just on parents finances but also on the relationship with their children and their own ability to save. Furthermore, as parents are less able to save for their retirement, more people will require help to unlock the value held within their property in later life. This is an intergenerational problem that goes beyond the simple view of the Bank of Mum and Dad.
“We believe strongly that first time buyers are the driving force of the property market but our Index reveals just how hard buying a first home really is and is likely to remain so for the foreseeable future. Low levels of confidence amongst this group will have ramifications further up the housing chain so it’s imperative that more support is offered.
“We know that first time buyers are relying on the new government to provide much needed solutions but following the recent General Election, housing policy is likely to be reviewed again under the newly appointed housing minister, meaning it remains more uncertain than ever.”