Outlook improving for first time UK buyers but high prices still a major barrier

The outlook for first time buyers in the UK is slowly becoming more positive with fewer believing that it is very hard to get on the housing ladder, new research shows.

Some 35% of first time buyers believe that it is extremely difficult to get on the property ladder, a fall of 4% from last year, according to the quarterly first time buyer index from specialist bank Aldermore.

The impact of high property prices is also starting to lessen with 27% saying it’s the biggest barrier to getting on the housing ladder, down from 37% in 2016.

First time buyers also appear to be more confident in their ability to save for their first deposit with the number currently living or considering living with family and friends to save falling by 10% to 59% year on year.

In addition, as the market begins to flatten, rising property prices are no longer seen as such a barrier, with a 10% decrease in those who consider it the biggest obstacle to buying their first home. Almost 37% found this to be the biggest barrier in 2016 in comparison to 27% in 2017.

The burden of raising a deposit differs across the country. Currently 45% of first time buyers in the East of England believe raising a deposit is the biggest barrier compared to 26% in London. Some 33% of first time buyers in the South East believe finding an affordable property and rising house prices are the biggest obstacles compared to 19% in the North East.

The index has also revealed that mortgage affordability and difficulties’ securing a mortgage has increasingly becoming viewed as more of an issue. Some 12% first time buyers believe mortgage affordability is an obstacle to getting on the ladder, in comparison to just 5% in 2016.

When it comes to saving a deposit, first time buyers are more willing to go it alone and are slowly becoming less reliant on friends and family to help them save. Some 59% are currently living with or would consider living with family and friends to get on the ladder, down 10% from 69% in 2016.

When it comes to regional trends, 66% of first time buyers in the East of England are in this position, in comparison to 51% in Scotland. This is in sharp comparison to 2016, when 75% of first time buyers in Scotland said they were either living with or would consider living with friends and family to improve their savings.

It is not just younger generations that are being forced to live with friends and family, the research show that 41% of those over 35 are currently or are considering living with friends or family to help them get on the property ladder.

Achieving their dream could still take some time however, with 34% of first time buyers believe it could take five or more years to get on the property ladder. For prospective first time buyers, their first home is often just the means to achieve their dream home and 24% are only planning to live in their first home for four years or less, while 33% will live in their first home for five to none years.

When it comes to what would help first time buyers get on the ladder, 26% believe building more homes would help them the most, 25% believe there needs to be a special stamp duty free allowance for first time buyers and 24% believe better mortgage products need to be introduced.

‘Over the past year we have tracked the outlook for first time buyers as well as the obstacles they are facing to get on the property ladder. While the situation is by no means easy, there does seem to be light at the end of the tunnel for those trying to buy their first home,’ said Charles McDowell, Aldermore’s commercial director for mortgages.

‘Although property prices remain a hurdle, slower house price increases has given a glimmer of hope to those trying to get on the ladder for the first time. Instead, mortgage affordability and difficulties in securing a mortgage are becoming more of an issue for first time buyers,’ he added.

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