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Rental Market set to strengthen as First Time Buyers hold back

Apr 18, 2024

Original article from Landlord Today - Rental Market set to strengthen as First Time Buyers ... (landlordtoday.co.uk)

Around half of first-time buyers say their prospects of owning a home are further away than ever due to the ongoing cost-of-living crisis.

Research by the Nationwide Building Society shows that 20% don’t think they will be able to buy until at least their forties – a significant increase on the current average first-time buyer age of 33.

The society’s poll of over 1,000 aspiring homeowners reveals that more than 84% say that the cost-of-living has impacted their plans. Six in 10 are postponing their homeownership plans by up to three years. 

Nationwide is continuing to call for government to provide greater support to boost homeownership through an independent review into the first-time buyer market, stamp duty reform and enabling more lending at high loan-to-income levels. Nationwide is also joining forces with the Building Societies Association and four of the UK’s largest building societies to produce a Housing White Paper this spring, outlining the solutions needed to tackle the homeownership crisis. 

When asked about what the biggest barrier was to getting that first home, nearly a third (31%) said it was saving for a deposit. However, that isn’t the only barrier, with 44 per cent pointing to an issue with affordability: 

- One in five (20%) said it was finding somewhere in their price range;

- 14 per cent said it was being able to afford the monthly repayments;

- One in ten (10%) said it was the ability to borrow enough for the mortgage.

Rachael Sinclair, Nationwide’s Director of Mortgages and Financial Wellbeing, says: “We need to solve the first-time buyer conundrum, which is why Nationwide has continually called for government to set up an independent review of the first-time buyer market. It’s why we’ll also be jointly launching a Housing White Paper with the Building Societies Association next week, which will outline the essential policy changes that are needed to tackle the homeownership crisis and support people into their first home.” 

For those that are trying to save the deposit, more than a quarter (26%) of prospective homeowners have been saving for their deposit for three to five years, with a further 10 per cent saving for six or more years.  

However, over half of respondents6 (52%) now have less money each month to save for a deposit as a result of cost challenges, while 29 per cent said financial pressures had impacted the amount of additional financial support, such as from parents. 

According to the poll, the average amount people said they had to put towards the deposit was £9,533 – far short of the £22,400 needed for a 10 per cent deposit based on the £223,554 average first-time buyer house price, according to Nationwide’s House Price Index. While more than half (52%) had up to £5,000 available for a deposit, around one in four (26%) only had up to £1,000, while 11 per cent said they had no money available to put towards a deposit. 

Eight in ten (80%) are concerned about mortgage payments, especially at a time when mortgage rates have increased and other bills have risen. 

The struggle to afford the monthly payments means many people are having to look at all the options when it comes to buying a first home, including who with and where. While more than half (57%) plan to buy with their partner or spouse, 12 per cent will look to buy with a family member. 

According to the poll, 55 per cent said they’d be willing to buy in another part of the country where house prices are cheaper, or where they could buy a bigger property, with 70 per cent of respondents being prepared to move up to 50 miles away just to buy their first home. 

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