New research has revealed over a million first-time buyers under 45 are set to shelve homebuying plans due to ongoing cost of living pressures and rising mortgage costs.
An Aviva survey identified that just under half (46%) of those asked were not currently house-hunting but intend to in future, with a further 16% saying they have no intention of doing so. Of these, one in five (20%) specifically cited the cost of living crisis and inflation as making buying a house unaffordable – the equivalent of over a million people.
The survey also shows the cost of a mortgage is being substantially underestimated – sometimes by as much as 54% – further dissuading more people from moving onto the property ladder.
The effect of this is seen in heightened demand for rental homes, with Rightmove reporting the number of people enquiring about homes to rent is up 23% on this time last year despite the total number of homemovers looking to rent or buy being up by just 1%.
Yet, any drop in homebuying demand from first-time buyers will of course be temporary – Rightmove suggest some 42% of first-time buyers with plans to buy in the next few years have already got their total deposit saved, indicating there is a group ready and waiting to see if mortgage rates drop.
“It’s completely understandable why some buyers, particularly some first-time buyers, are waiting for some more financial certainty,” said Tim Bannister, Rightmove’s property expert, adding:
“Now that there are signs that mortgage rates are settling down, the indicators are that they will stabilise at a higher level than previous buyers had been used to. If someone has their deposit saved and is ready to move, they may find that right now presents a better opportunity than a few weeks ago, particularly with more choice coming onto the market and some sellers pricing more competitively in the lead up to Christmas.”
Matt McGill, MD Aviva Equity Release, said:
“Despite resilient housing market activity, it now appears rising mortgage rates are dissuading many from taking that important first step onto the property ladder.”
The role of intergenerational giving remains as important as ever for helping cash-strapped first-time buyers. Across the study, 12% of respondents said they were expecting a gift or loan from parents to help meet their costs, and 4% said they expect the same from grandparents.
Matt McGill concluded:
“The amount of support being given or intended by different generations of the family to first-time buyers is substantial. We have seen this trend, particularly of grandparents providing funding, increase in recent years. Family members are more and more willing to use wealth they have accumulated in property over the years to provide younger people with a leg up onto the property ladder.”
One Response
Who was surveyed, and how is ‘first-time buyer’ being defined? The average FTB – someone who has actually bought their first home – is in their early 30s; did the survey pool include a large number of teens or early-twenty-somethings, or students or unemployed people who would like to buy but had, and continue to have, no realistic way of affording a property anyway (but are still being described as ‘FTBs’ because they’ve never owned a home)?
Considering there is a large number of people in the pool who have no idea how much their mortgage payments might be, I can only assume these people have never looked at what they can afford, never viewed a property to buy, and are therefore not serious buyers.