First time homebuyers have always had problems when trying to get on the property ladder. Now, with the trend of surging house prices, it might be about to become even harder.
This article does not constitute advice. Professional advice should be taken prior to acting on any part of it. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.
According to research conducted on behalf of Barclays, the average income of both solo and joint first-time homebuyers has risen from £45,900 in 2019 to £50,800 in 2021 and from £63,800 in 2019 £70,500 in 2021 for solo and joint buyers, respectively. And most homebuyers are not doing it on their own! Over half (56%) of those surveyed said that without financial support from family or loved ones, they wouldn’t have been able to afford buying a home.
Many will need a leg up to get on the property ladder
There seems to be a mismatch in expectations between potential homebuyers and their relatives when it comes to financial assistance for home-buying. Over half (58%) of survey respondents said they didn’t expect any help, however nearly three-quarters (71%) of parents expect to provide some kind of assistance when it comes to helping their children or grandchildren buy a home.
In some cases, this help will come from inheritance, with about half (49%) of parents planning to leave a bequest to their younger family members, but less than a third (29%) of first-time homebuyers expect it.
The age of parents is a factor in these expectations, with parents under the age of 60 being less inclined to provide financial support to their family compared to parents over the age of 60. This could be because many people close to retirement age often are better placed to be generous financially. They often have more cash savings, investments, and property equity of their own but many plan to pass along some of their wealth only after they die, but it’s important to remember that they might need to access that money themselves for care at the end of their lives, so the money left behind might not be as significant as they thought.
While financial assistance from family or loved ones is certainly a welcome support, there’s no guarantee you will definitely get it, or that it will be enough that saving on your own won’t be necessary.
Deposits averages decline
While a standard deposit is still the norm when it comes to home-buying, there have been more options available for low deposit mortgages. Which is a good thing because, contrary to income levels, the average deposit paid by buyers has actually decreased over time.
The average deposit paid by a sole first-time buyer fell from £71,400 in 2020 to £61,100 in 2021. This has also been the case for joint buyers as well, although not as extreme, with the average deposit dropping from £63,800 in 2020 to £61,000 in 2021.
Saving up enough money for a deposit remains the biggest obstacle for first-time homebuyers, even with a decade of saving under their belt. The average person saves for a deposit for close to a decade, but many wish they started earlier or saved for longer because of the struggle to amass a sufficient deposit.
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