The findings of the Barratt Home Buyers study of 2,275 homebuyers in Britain, has revealed a significant shift in market perceptions compared with a year ago with fewer people citing finance issues and selling their own home as difficulties.
The ability of homebuyers to find a suitable property has deteriorated and is now cited by 30% of respondents as difficult. It is only seen as easy by 5% of those surveyed. Some 32% of home buyers reported that they have now been looking for a house for over six months.
A year ago, 39% said raising a deposit was the main barrier to finding a home while 35% said it was selling their current property and 30% said it was finding a mortgage. This year those experiencing difficulties finding a mortgage have halved to 15% as have those experiencing difficulties selling an existing property which is now 17%.
Buyers appear to have caught up quickly with the fact that mortgage lending is improving. However, they are now starting to overestimate the size of the deposit required and in some cases are doing so by a factor of three.
First time buyers said that on average they are expecting to put down a 15% deposit which would equate to around £25, 000 based on the average Barratt First time buyer price of around £165,000.
However, a more realistic deposit requirement is now 10%, some £16,000 on Barratt first time buyer price, and as low as 5% or £8,000 under the NewBuy scheme.
The research found that the NewBuy scheme is not as well understood as it might be. Nearly two thirds, 65%, of buyers said that they were unaware of a tax payer backed mortgage scheme. Some 12% were aware and intended to use the scheme. Barratt has indicated that it expects 10 to 15 % of sales to use this low deposit scheme.
‘There has clearly been a shift in the market with a growing belief that the availability of mortgage finance has become a little easier and that's got to be good news for home buyers. However, customers are overestimating the size of the deposit that they would need, particularly as NewBuy becomes established in the market,’ said Mark Clare, chief executive officer of Barratt Developments.
‘The Barratt study also underlines how low the level of activity in the market remains with a scarcity of property to buy. We are now steadily increasing production and this year we are likely to build more homes than at any time in last five years. In the last few years, we have invested £2 billion in land and our priority is now to bring these new sites into production,’ he added.
First time buyers in London save for a deposit longer than in any other part of the country at 4.1 years compared with 3.4 years nationally and need to put down an average deposit of £42,000. The average deposit saved by those polled across Britain was £26,000.
Buyers in the South East are putting the greatest amount of capital towards the purchase of their next property. On average those in the South East say that they will be putting £135,000 towards their next property. This compares with on average £60,000 in the North West.
The study also found that home ownership remains rated as important by 83% of buyers and residential property is overwhelming seen as the most likely type of investment to give the best financial return over the next 10 years far greater than shares, pensions or cash ISAs.
Top features that people want include off street parking (73%), ensuite bathrooms (65%) and high speed broadband (56%). Luxury items such as home cinemas (7%) and games room (5%) are a long way down the list behind delivery boxes for parcels (19%) which are especially favoured by childless buyers.
