A survey commissioned by Nationwide Building Society on the attitudes to home ownership, shows that confidence among aspiring homeowners is still high, despite tough market conditions.
With average house prices now at around £145,000, 74% of people who currently rent from a private landlord or live with their parents are still planning to buy their own home. Interestingly, potential first time buyers are now going to new lengths in order to get on the property ladder:
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One in four (23%) would consider taking a second job in order to be able to buy a property
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16% say that they would consider buying with friends
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Almost a fifth (17%) would consider buying a property in a poor condition which needed renovation
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One in seven (14%) would try to borrow their deposit from their family
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11% would move to an area where they didn’t know anybody so that they could afford a home
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One in ten (10%) would take in a lodger
The research, conducted by TNS, reveals that young people have not given up on the idea of owning their own home. More than a third (38%) of those questioned said that they think that they will be able to buy their own home within the next two years and a further quarter (23%) believe that they will be able to buy within the next three to five years.
Nationwide divisional director, Jeremy del Strother, said: "Affordability for first time buyers is becoming a bigger issue because salary increases are not keeping pace with rising property prices.”
“However, people are finding new ways of getting on the property ladder by seeking to boost their income, by making some significant compromises on location or by deciding to club together with friends and family."
"As our survey shows, some borrowers will be tempted to borrow their deposit and take other steps in order to get onto the property ladder. However, young borrowers should not over-stretch themselves in the rush to buy."
Nationwide’s research reveals that people who aspire to buy their own home realise that the market is not getting any easier:
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42% expect prices to keep rising over the next two to three years
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One third of people (34%) who currently pay rent anticipate their monthly outgoings would increase when they get a mortgage. One quarter (25%) of those who live with their parents anticipate mortgage payments would be more expensive than paying rent.
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Despite this adversity, potential first time buyers cannot wait to get their own home. Over half (56%) of those questioned think that the time it will take them to buy is too long. This figure rises according to expectations of the time-scales involved in buying a property - 58% of those who think that it will take between one and two years to buy consider this to be too long; 70% of those who think that it will take from three to five years also consider this to be too long.
Jeremy del Strother believes that careful financial planning can go some way to alleviate the problems that first time buyers are facing: "There is no quick-fix solution to buying your first home,” he says, “but ensuring that you have cleared as much personal debt as possible before applying for a mortgage will ensure that you are in a much healthier position financially.”
“Whilst buying with friends and sharing monthly mortgage payments is an option for some, we would suggest that those wishing to do so seek proper legal advice before going ahead. Whatever the case, make sure that you shop around for long term good value and pick a lender that does not charge high initial fees such as a Mortgage Indemnity Guarantee."
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