First Time Buyers will Make Up Approximately One Quarter of All Home Buyers Next Year
For the housing market to recover and homeowners to begin seeing their equity levels grow again it will require first time buyers to return to the housing market to buy starter homes. Currently the property ladder is practically frozen. Without buyers for starter homes those hoping to upgrade to larger properties cannot do so. Those hoping to downgrade have no one moving up the ladder to allow them to move out of their empty family nest homes. Everyone is basically stuck in the property they now own without first time buyers coming into the market at normal levels.
According to a recent study by Rightmove first time buyers will only make up about 25% of the homes purchased next year. The normal level of first time buyers purchasing properties before the credit crisis was at 40%. The study involved 16,000 people and of those participating about 22% will have not been able to raise a deposit of 10% by the time they would hope to buy. The study revealed that raising the deposit needed for a purchase was the main obstacle in buying for 36% of the respondents.
There is also a problem with adequate starter homes being available on the market for first time buyers. The average price for a new home for a first time buyer hoping to buy in the study was £150,000. The number of homes coming onto the market in this price range has declined by 5% over the last year.
Housing Minister Mark Prisk remarked, “The Government is taking action to help aspiring homebuyers take their next step on the property ladder - whether first time buyers looking to purchase their first home, or existing homeowners who want to move in order to meet their changing needs.
“Over 27,000 new homeowners are set to benefit from the FirstBuy scheme, which will help increase movement throughout the housing market.
“We have also made provision through the NewBuy Guarantee, the first scheme of its kind, to help tens of thousands of aspiring and existing homeowners purchase newly-built homes with just a fraction of the normal deposit, as little as 5pc.”