First time buyers (FTBs) are more optimistic about being able to afford to buy a home than they were a year ago according to the latest sentiment survey by the Building Societies Association (BSA).
Following two Bank of England rates cuts in 2024, and a further one last week, the January Property Tracker Report reveals one third (33%) of first-time buyers think now is a good time to buy a property, almost double the number a year ago (16% in Dec 2023). And FTBs are more positive than their home owner counterparts; just one in five (20%) of all UK adults who think now is a good time to buy.
This positive sentiment is in spite of upcoming changes to stamp duty which will impact FTBs as the nil rate band reverts to 2022 levels from 1st April 2025. Only 16% of FTB responding to the survey said stamp duty was a hurdle to buying a new homes. By comparison 22% of homeowners consider SDLT to be a barrier.
Half of FTBs (52%) see raising a deposit as the bigger barrier to homeownership, although the sentiment has fallen from 12 months ago when 55% responded. Affordability of monthly mortgage payments remains a concern for half of FTBs, although again this has fallen from 62% a year ago. Only 1% said they are not at all confident that they can keep up their repayments
Commenting on the findings, Paul Broadhead, Head of Mortgage and Housing Policy at the Building Societies Association said:
“It’s encouraging to see that first-time buyers’ confidence in the housing market has grown significantly in the last 12 months. Although there were fewer Bank Rate cuts last year than had been expected, the two reductions did mark a significant turning point in what has been a difficult three years.
“However, we know only too well that confidence in the housing market can be fragile and change quickly. First-time buyers will be hoping the MPC make another cut to the Bank Rate today, to further ease their affordability pressures. But with political developments around the world and in the UK causing uncertainty in the financial markets, the Bank Rate cuts this year may again be fewer and potentially later than current forecasts.
“Despite their optimism, we know that first-time buyers face an unprecedented affordability issue and the BSA has repeated called for a long-term strategy that will increase the number of first-time buyers.
“The Financial Conduct Authority’s mortgage lending review, which we hope will consider the relative costs and benefits of stricter regulation versus the social benefits of homeownership, should help deliver greater mortgage innovation to meet the needs of prospective homebuyers. For example, allowing part repayment, part interest only lending, and the flexibility to shift between them, could improve affordability for many and be the difference between be able to get on the property ladder or not.
“Building societies have a proven track record of lending responsibly and supporting first-time buyers and want to do more. We are therefore very keen to work with the FCA to achieve this.”
