The UK residential property market is facing a first time buyer crisis which is likely to get even worse, a new report warns.
The number of people planning to buy their first home has slumped to the lowest level since records began and experts are warning that the ‘death of the first time buyer’ could have a devastating impact on the market.
The poll, by property information firm Rightmove, asked more than 22,000 people whether they planned to buy a property over the next 12 months. Of those who planned to buy, just 22% were first time buyers.
For a healthy real estate market, the figure should be 40%. Only a year ago, it was 31% and experts point out that without first time buyers the housing chain comes close to collapse because there is nobody to buy the properties on the bottom rung of the ladder.
Rightmove director Miles Shipside described the findings as a cause for concern. ‘The number of prospective buyers at the bottom of the chain is half the normal level. The question that sellers further up the chain will be asking themselves is, “Who will be at the bottom of my chain?” he said.
He added that banks are demanding larger deposits, making mortgages less accessible to first timers. ‘Due to the new deposit rules they have to play by, it comes as no surprise that they are staying away as they are probably busy saving,’ said Shipside.
The availability of mortgages emerged as one of the main barriers facing 55% of first time buyers. Around 20% were concerned about the decline in house prices, while 73% believed that prices would be unchanged or higher in a year’s time, an increase of 13% in the last three months.
The number of people buying for the first time has fallen considerably. Last year, just 199,000 got on to the housing ladder compared with nearly 600,000 a year earlier, according to figures from the Council of Mortgage Lenders.
The average deposit is 24%, compared with just 10% in 2007. To buy in some areas, such as London, first time buyers need a deposit of nearly £100,000, which is four times the average salary. The report suggests that government attempts to help young people on to the property ladder have not worked. First-time buyers do not have to pay stamp duty on homes bought for £250,000 or less but this does not seem to have had much effect.