Over 1.3 million non-homeowners hope to pay less than the average house price for their first home, reveals Alliance & Leicester Mortgages’ quarterly movingimproving index.
First time buyers are in a bargain hunting frame of mind, as three in four (75%) who are currently renting or living at home with their parents are setting their sights on buying a property costing less than £184,000. Currently the average UK house price is £184,152.

This compares to nearly 300,000 first time buyers in the UK who plan to spend over the national average house price on their first home. 15 per cent of prospective new buyers who are currently renting or living at home with their parents plan to spend between £184,000 and £250,000.

Stephen Leonard, Director of Mortgages at Alliance & Leicester, said: "Our survey reveals that most first time buyers are pragmatic about the amount of money they can afford for their first home. With the majority choosing to look at houses below the UK national average, affordability is first and foremost in their thoughts. First time buyers are in a good position to take advantage of the positive moves lenders are taking to ease their financial burden."

Stephen Leonard continues: "Now, lenders such as Alliance & Leicester, are enabling more buyers to get on the housing ladder in a responsible manner by introducing greater lending flexibility which will give prospective buyers something to cheer about."

Buoyant about buying
Non-homeowners are more buoyant about buying this quarter. Overall, they are more upbeat about their ability to afford a house as this quarter, fewer renters and those living with their parents feel they cannot afford a property (22%). Last quarter 28 per cent felt they could not afford to get onto the property ladder, perhaps an indication that the base rate cut has had an optimistic effect on first time buyers’ hopes to get on the housing market.

Of all the regions, people in the East of England are the least confident about getting onto the housing ladder as nearly a third (30%) feel they cannot afford to buy, while those in the South West are most confident as only one in ten (11%) feel the same way. Interestingly, those in South West (20%) are also the most optimistic about getting their foot on the property ladder for the first time across all regions.

Parents provide shelter and chance to save
Parents are giving their children the opportunity to save towards getting onto the housing ladder as the research reveals that living at home is still the favoured option for many. Those in their 20s are most reluctant to leave home as one in four (25%) choose to remain in the family home.

And it seems men are the worst at cutting the apron strings. Men in their 20s are 50 per cent more likely to live at home with their parents than women (29% vs 18%).

The research indicates that more women (56%) in their 20s choose to rent compared with their male counterparts (40%). Of all the regions, Londoners are most likely to live at home and they are twice as likely to do so as those in the East Midlands (13% v 6%).

Stephen Leonard said: "Living at home with parents provides a chance for those wishing to get onto the housing ladder to benefit from no, or low rent, while enabling them to kick-start their savings for a deposit towards a house. This also signifies a shift in social trends with more young men choosing to live at home than women. For the last two quarters we have seen more men in their 20s indicate that they would rather stay put with their parents than flee the nest."

The move on up
It is not just first time buyers who are optimistic about getting onto the housing ladder. Nearly half of existing homeowners (47%) who are looking to move further up the property ladder expect to pay up to £100,000 more than their current property is worth.
Other findings reveal:

- More singletons live at home with their parents (39%) than own their own home (23%) or rent (36%)
- The average age of a first time buyer is 34****, however over half of non-homeowners in their 30s (53%) do not want to buy a property.
- Londoners represent the biggest population of renters, with 43% of Londoners choosing this form of housing compared to 20% in the South West – this reflects the relative affordability of property.
- Of all the regions, people in the North East are most likely to be homeowners (68%) compared with people who live in London (41%), where people are least likely to be homeowners.