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Problems of First-Time Buyers
The UK's first-time buyers want more help getting on the housing ladder, according to findings from Brahm Research and financial services policy specialists Cicero Consulting. While media and industry attention has focused on stamp duty reductions, the survey showed that the biggest concern for younger people is affording a deposit.
Brahm interviewed 18 to 35-year-olds, and found that over half (52%) would like to see a Government-led incentivised savings scheme to help first time buyers save for a house deposit. Property ownership is still a top priority, with 54% of non-homeowners wanting to own their own home within the next ten years: but again a slight majority (52%) say it is unrealistic to think they will be able to buy within the next five years.
The biggest obstacles to purchasing a property in the next 2-3 years are seen to be:- saving for a deposit (44%)
- not having the income multiple needed to meet the lender's requirements (35%), and
- affording the monthly repayments (22%).
When asked how first-time buyer affordability could best be resolved, the two most popular responses were a Government subsidised deposit savings product and a reduction in Stamp Duty specifically for first-time buyers - both polling 52% support. The former are not uncommon in other countries including Germany, France, Canada, Austria, Hungary, Slovenia and Greece.
Co-ownership is an unpopular option. A 44% plurality of non-homeowners said that part owning a property with parents did not appeal, while 57% rejected the possibility of buying with a friend and only 19% approved of it.
Conservative Shadow Secretary of State for Work and Pensions, David Willetts MP, said the research highlighted the massive impact house prices could have on the whole cycle of savings. 'For all the concern about getting people to save for retirement, we shouldn't forget that people need to save for other things as well. The danger is that people will decide they don't want to save for a pension before they've put down a deposit on a house, and that there is no point saving for a deposit when home ownership looks out of reach'. LibDems MP Vince Cable said that in recent years 'first time buyers have been squeezed out of the housing market by the large increases in house prices. It is essential that we start to make the housing market more accessible to these buyers'.
According to Iain Anderson, Chief Corporate Counsel at Cicero Consulting, the coming General Election will see the housing market and personal savings high on the agenda. 'All parties need to take notice of this clear demand from younger people to buy their own homes and to develop the right policies to help them to do so'.
In addition to focus groups, Brahm Research used CATI to interview 1,300 UK citizens aged 18 to 35 in February 2005: 996 were non-homeowners. The company is online at www.brahm.com
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