How first time buyers can get on to the property ladder

Owning a property is a dream for many. However, the reality is a lot different and many potential first time buyers are left in limbo. A growing number of wannabe homeowners are stuck and can’t seem to find a way to take their first steps onto the property ladder.

Here are a few tips and hints to help first time buyers become first time homeowners.

Deposits

The average first time buyer deposit fell in the first half of the year, according to research produced by Halifax. Deposits have marginally shifted and were 1% lower in the first six months of the year compared to the same period in 2011. The average first time buyer deposit was £27,857 in June. Whilst deposits have fallen slightly, they are still a jaw-dropping 59% higher than the average deposit in 2002 when it was just £17,523.

The economy has taken a turn for the worst with the UK being in a double-dip recession. This means that banks and lenders are being cautious with their cash and asking for significantly higher deposits, putting savers in a difficult position.

Finding the cash to stump up a deposit can be hard, especially as the high cost of renting can eat away at any savings. First time buyers trying to save might wish to try and reduce their outgoings and cut costs to save. The cost of living is easing up on households, giving them more spending power and the ability to save more.

Compare savings accounts with Propertywide.

Figures from the Post Office show that a staggering 45% of potential homeowners plan on saving the entire deposit themselves. A further 28% are getting financial help from their partner and 16% are turning to the bank of mum and dad for support.

“First time buyers are the life blood of the property market,” says Mike Cook, Head of Mortgages at the Post Office.”

Our research shows that constant tales of frustration regarding first time buyers and wider economic issues have not dampened aspirations to get on the housing ladder.

“It is also interesting to see that despite the resurgence of 10 per cent deposit mortgages recently, the average first time buyer is aiming for the cheaper rates available at 15 or 20 per cent deposit – even if it takes that bit longer to save.”

Saving

The high price of rent doesn’t give potential buyers much room to save for a deposit. However, by making a few simple lifestyle changes could make a difference. By cutting back on luxuries such as the weekly take-away or morning coffee, the small change could make a big contribution. One way which savers can then make the most of their cash is by saving money into a tax-free Cash ISA.  Cash ISAs only allow you to save up to £5,640 this tax year, so it might be worth looking into Stocks & Shares ISAs as well, as the total allowance is £11,280.

House prices

A growing number of UK towns and cities are becoming increasingly affordable for first time buyers. In fact, the number of affordable towns and cities for potential homeowners has risen to the highest level for a decade.

This is great news for buyers looking for their first home as it gives them more flexibility to find an ideal location. Halifax research shows that the average house price paid by a first time buyer in June 2012 was considered ‘affordable’ for someone on an average income in more than half of all Local Authority Districts (LADs). 54% of all LADs have now been officially deemed ‘affordable’ for new homeowners.

Martin Ellis, housing economist at Halifax, commented:

“With first-time buyers forming a vital part of the housing market, it is clearly encouraging that the number of those getting onto the property ladder for the first time may well increase this year, albeit from a historically low level. This partly reflects the substantial improvement in home affordability for first-time buyers since 2007, following the fall in house prices over the period.”

“However, the continued uncertainty over the outlook for the UK economy and the difficulties faced by many in raising the necessary deposit remain significant hurdles for those wishing to buy their first home.”

The North East was found to be the most affordable region in the UK for first time buyers. Despite this positive news for buyers, there is still a stark difference in prices between the North and South. Just 9% of all UK LADs in the South can be classed as affordable for new buyers.

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Posted by: Nicola Severn Categories: Buying Property, House Prices, Industry News, Property News, Uncategorized Tags: , , , , 1 Comment

One Response to How first time buyers can get on to the property ladder

  1. avatar Karolay says:

    You should claim the pro-rated auonmt you paid on the old property and any pro-rated auonmt you paid on the new property (often in advance of the year-end billing), then remember to make any necessary adjustments after official tax bills come out and get re-divided. In theory, you paid the taxes by giving the money to somebody else (or putting it into escrow for taxes) and you are allowed to assume they actually made the necessary payments to the necessary authorities. A lender holding tax escrow should give you an annual statement of taxes collected, held and paid out.