With the cost-of-living crisis continuing to squeeze budgets and push prices up, many people across the UK are being forced to put their personal goals temporarily on hold.
Prospective homeowners are no exception, as a combination of high mortgage rates and rising rental costs prevent thousands from getting on the property ladder.
Given the debilitating impacts these factors are having on purchasing power, it’s small wonder that the number of first-time buyers [FTBs] recently fell to the lowest point in a decade, according to figures published by Yorkshire Building Society.
It appears that taking that all-important initial step onto the property ladder has rarely been as difficult as it currently is for FTBs.
However, the hardships that would-be buyers are currently facing have done little to weaken their resolve – in fact, the aspiration of homeownership remains as strong as it’s ever been. Indeed, in Q4 of 2023, over 65% of searches on our website related to FTBs, with 80% of enquiries in London coming from prospective purchasers.
Although January traditionally sees a jump in new home enquiries, the numbers we’re now seeing are encouraging, and serve to illustrate the extent of demand among prospective purchasers. However, without the means of turning their homebuying dreams into a reality by themselves, it’s clear that much more must be done to support FTBs.
As such, it’s heartening to see that some lenders are starting to offer improved rates on fixed term mortgages in an effort to stimulate the market; a move that is surely welcomed by anyone who’s been struggling to get on the property ladder.
Meanwhile, the ever-faithful ‘Bank of Mum and Dad’ continues to help many young buyers in securing a deposit. Indeed, recent data by the Institute for Fiscal Studies [IFS] shows that nearly half of FTBs in their 20s are now reliant on the Bank of Mum and Dad to complete the purchase of their first home.
While it’s great that there are still options open to some FTBs who would otherwise be unable to buy, the fact remains that these avenues won’t be open to all, and more support is needed as a result.
How the Government can help
Things haven’t always been this way though. The Government’s Help to Buy scheme was hugely integral for FTBs following its introduction in 2013, helping thousands to purchase a new build property.
Essentially, this enabled prospective buyers to receive a government-funded deposit worth 20% of the full purchase price of the property, while contributing a deposit worth 5% themselves. As such, Help to Buy served as a highly appealing and accessible means of securing a home for those who would alternatively struggle to save a larger deposit.
However, as the initiative officially ended on 31st March 2023, it is now sorely missed by many prospective purchasers. The Chancellor’s recent Autumn Statement was notable for its absence of any meaningful help for FTBs, focusing instead on tax and spending cuts, but I remain hopeful that the Spring Budget will introduce a new scheme that will provide support to would-be buyers.
What this will involve exactly remains to be seen, but the Government simply cannot afford to ignore FTBs if this segment of the market is to flourish throughout 2024 and beyond.
Reasons to be cheerful
There’s no denying that times are tough for prospective purchasers, but those looking to get on the property ladder should keep faith that help is surely soon at hand for them. Frankly, the situation isn’t sustainable in its current form given the important role that FTBs play in the property market, and Government intervention is inevitable as calls for greater support grow louder and louder.
In the meantime, initiatives like Shared Ownership – which enables purchasers to buy a share of a property and pay rent to a landlord on the rest – remain appealing methods for FTBs to secure a home. After all, the desire to get on the property ladder remains as steadfast as it’s ever been; FTBs are simply in need of a bigger leg up to get their foot on the first rung.