New research has suggested the current conditions within the market have left the homeownership dreams of many aspiring first-time buyers “in tatters”.
Specifically, Leeds Building Society’s research, which was conducted in the aftermath of the Truss government’s mini-budget, suggested two thirds of those planning to buy in the next five years have delayed their purchase by an average of 18 months, with 89% pushing it back by at least six months.
Of those that delayed their purchase, the rising cost of living (21%), higher mortgages rates (19%), and falling house prices (20%) were the most common factors.
The building society said the figures “paint a harrowing picture of the housing market for first-time buyers” – understandable given 49% of aspiring first-time buyers now doubt that they will ever be able to buy a property according to the lender, with 81% saying the cost of living crisis has made it harder to save for a deposit.
For those who’ve scraped together a deposit, the picture remains bleak, with one in five first-time buyers having had a mortgage offer withdrawn leaving them unable to get another, and 68% saying they would now struggle to meet the higher repayments amidst higher intertest rates and repayments.
This sentiment is reflected in the Royal Institution of Chartered Surveyors’ (RICS) latest Residential Market Survey which revealed new buyer enquiries fell for a sixth successive month in October.
“The findings from our research are stark but clear: the home ownership dream in the UK is in crisis,” said Richard Fearon, CEO, Leeds Building Society. He went on to suggest a route towards delivering “meaningful change” to the housing market:
“In the short term, a stronger case needs to be made for Shared Ownership to help more people get the keys to their first home. The key advantage of Shared Ownership is that buyers need a smaller deposit, potentially allowing them to buy sooner than they might otherwise. There is a clear lack of awareness about the benefits of Shared Ownership and lenders, brokers, and estate agents all have a role to play in changing that.”
Remedying such “structural issues” is the intention behind Leeds Building Society’s new “roadmap” report, “Tackling the UK’s Homeownership Crisis”, which proposes seven key long-term public policies for the housing market.
“The problem is clear,” said Fearon: “A crippling lack of homes to meet demand fuels rising house prices, drives ever higher deposits, and makes repayments less affordable for first-time buyers.”
In tackling this, their seven proposals – which are “designed to find achievable improvements to the supply of homes and overcome demand-side barriers in a cost-effective way”, are as follows:
- Build more homes
- Tackle the skills gap in construction
- Maximise the potential in existing properties
- Build sustainability into our housing market
- Increase routes to homeownership
- Help people save for a deposit
- Provide meaningful support for borrowers
The full report, including explanatory notes on the seven proposals, can be viewed here.
2 responses
Shared Ownership is NOT the answer – there are too many issues with shared ownership that are catching shared owners in a trap, either in blocks of flats with cladding where they are 100% responsible for remedial works which may be double or triple what they paid for the property and secondly issues with estate rent charges where housing associations (and perhaps also their solicitors) have not thought through the acquisition and consequences on staircasing/lease extensions properly.
Quite Zahrah Aullybocus
Before last Xmas I was asked to review shared, freehold purchase documents for a young relative. I could only advise that (despite the total removal of the “L word”) these were written with a view to making them unintelligible to most. The transaction aborted for other reasons
Last Saturday HMG’s weekly publication of FTT judgments contained a sturdy contribution (77 Outram Road, Croydon) from Judge Carr calling for better communication between parties.
I would like to see this required between those involved with homes regardless of tenure. My own flat, I only discovered out of the blue, was subject to an NDA of allegedly significant but unknown content between the freeholder and the managing agent. This is despite the RICS code anointed with special consideration in the FTT requiring openness and what could be less open than an NDA?