There are 20 million people currently renting a property in the UK with nearly half (45 percent) of all prospective home buyers in the UK expecting to remain shut out of the property market for the foreseeable future, according to the latest Post Office Money Mortgages survey.
The average age that people expect to be able to get on the property ladder has risen to 36 years old up from 35 last year (2014) suggesting that rising house prices and the slow upturn in the economy remain challenges for first-time buyers. The expectation that they will have to wait until their mid-thirties is shared across most would-be buyers, with those in the East Midlands the most skeptical, fearing they will be 46 before buying a home of their own.
The survey reveals that raising a deposit is perceived as the biggest barrier to getting a foot on the property ladder. UK renters believe, on average, that it will take them eight and a half years to save enough for a deposit, with one in ten (10%) expecting to wait for more than a decade. This has decreased from 10 years in 2012 and nine years in 2014, suggesting there is a silver lining and that those who do see themselves buying a property envisage it happening slightly quicker than in previous years.
However, one in four prospective home buyers (28 per cent) claim they will never be able to afford a deposit unless their circumstances dramatically change through a better paid job or cash windfall. Not being able to afford mortgage repayments (17 per cent) is also a key concern.
John Willcock, Head of Mortgages at Post Office Money, said: “The average age at which non-homeowners expect to get a foot on the property ladder has increased to 36 over the past year, which is a worrying trend. It is clear that there is still a long way to go to inspire confidence in the first time buyers’ market, with nine million feeling they won’t ever be able to buy their own property.”
“The size of a deposit is clearly the biggest hurdle that people face, with only 31 per cent expecting to be able to raise the money alone.”
A third (31 per cent) of those looking to buy a property say they would save the full amount for the deposit themselves. One in four (25 per cent) will take advantage of the government’s ‘Help to Buy’ scheme. Others will rely on loved ones with help from their parents (13 per cent) or partners (19 per cent).
Top five reasons for not currently owning a home
Main reasons for not owning a home
Percentage of current renters
Can’t afford the deposit unless circumstances change
28 per cent
Can’t afford mortgage repayments
17 per cent
Don’t want to own a home
12 per cent
Currently saving for a deposit
11 per cent
Like the freedom of being able to move when I want
8 per cent
Nearly half (46 per cent) of those who don’t currently own a property say they would be encouraged by a fall in house prices, though this may still be a long way off as prices are still on the up, with a 5.7 per cent increase in the year to June 2015.**
Meanwhile, 26 per cent of renters believe more assistance for first-time buyers from the Government would be a great help. Lower interest rates would lead 24 percent of non-home owners to buy in the near future, whilst the re-introduction of no stamp duty for first time buyers would encourage 14 per cent to take the leap.
Hitting important milestones in life, such as getting married (13 per cent) or starting a family (10 per cent) are also triggers for first time buyers.
However 11 per cent of renters (more than two million people) say they enjoy the freedom of renting and admit they have no desire to own their own property.
John Willcock continued said: “Clearly more needs to be done to give prospective homebuyers the confidence to get their foot on the ladder. Post Office Money has a range of mortgage products suited to the diverse needs of the UK’s potential buyers and provides expert support to help ease customers through the process."
Across the UK, would-be buyers in the West Midlands and the South East see buying a home as a particular challenge with 51 per cent and 59 per cent respectively anticipating they will never be able to afford it. Meanwhile, 37 percent of renters in the East of England and South West see themselves renting for life.