Reports released this week by TSB and Barclays have highlighted the difficulties faced by many people who want to get on the property ladder, with 80% of first-time buyers moving back in with their parents to cut costs, and the number of renters saving for a deposit hitting a six-month low.
The TSB report revealed that almost all first-time buyers (96% of survey respondents) needed financial help to gather the required deposit. The survey of 1000 first-time buyers who had bought a property in the last year found that 80% had to move back in with parents to save enough to buy their own home, with around one in 10 (9%) saying they made a major compromise to make purchasing their first property affordable.
‘This has been a growing trend for some time, indicating how expensive it is for first-time buyers to get onto the housing ladder’, said Mary-Lou Press, president of NAEA Propertymark.
“So much so that they have to make enormous sacrifices and/or depend upon financial help from their relatives just to purchase a property.”
Data from Barclays, gathered from across the bank and combined with consumer research, found a similarly gloomy picture, with increasing numbers of renters believing their dreams of property ownership are slipping away.
Only 17% of renters reported saving for a deposit in July – down from 31% in January. Six in 10 renters (62%) have seen or expect to see their rent increase this year, squeezing their ability to save for a deposit. Rising rent costs reflect the small proportion of renters (12%) who believe that home ownership is within reach within the next year.
And, although increasing rents make it difficult to save, house prices have overtaken the cost of deposit as the top barrier to home ownership, cited by 38% and 35% of respondents respectively.
Barclays’ data also shows that housing costs for renters amount to almost a third (30.8%) of take-home pay, with homeowners spending just over a quarter of earnings on their mortgage (26.6%). As a result, 26% of renters say they’re struggling to afford monthly payments, compared to 15% of homeowners.
‘Many people dream to one day own a home, but our latest findings highlight how renters are finding it ever harder to save for a deposit while keeping up with rising costs’, said Jatin Patel, head of mortgages, savings and insurance at Barclays.
Megan Eighteen, president of ARLA Propertymark (Association of Residential Letting Agents), said rent in many areas has reached unsustainable levels and was preventing people from owning their own home. She added:
“Alongside this, the average deposit to purchase a home is around £70,000, so to pay heightened rent, as well as save for a deposit, will be nearly impossible for some.
“It’s really important that we tackle the root causes of these issues head-on. Additional support needs to be provided to first-time buyers in order to help them step onto the housing ladder.”
