Recent changes in the property market lifts homebuying costs
More than half, or 55%, of all potential first-time buyers in the UK are currently aiming to raise a larger deposit than initially planned, as homebuying costs have soared, results of the latest Aldermore First Time Buyer Index have shown.
The survey of 2,000 prospective first-time buyers also revealed that, on average, these buyers are looking to raise £47,067 for a deposit. Despite the challenges posed by increased homebuying costs, a substantial 72% of them maintain a positive outlook, recognising the long-term value of homeownership and viewing it as a solid investment for the future.
However, the survey also highlights that 49% of aspiring first-time buyers are adjusting their property preferences by planning to purchase a house of lower value than initially intended. This shift is attributed to an anticipated rise in monthly repayments due to higher interest rates, impacting the overall affordability of homeownership. On average, prospective buyers are considering allocating a maximum of 30% of their monthly income after tax towards their mortgage.
Also, it was found that 50% of potential buyers are opting to delay their homebuying plans, hoping for a potential drop in property prices.
Regionally, London and Oxford emerged as the most expensive cities for first-time buyers to raise a deposit, requiring £145,272 and £132,101, respectively. By contrast, Sunderland stands out as the most affordable city, with a deposit of £21,117 — highlighting a significant contrast with the capital, where buyers are putting down six times more for their deposit.
“The property market has been a difficult environment to navigate following the considerable volatility we saw in late 2022,” Jon Cooper (pictured), head of mortgages at Aldermore, commented. “Homeownership is increasingly expensive, and first-time buyers are having to raise larger deposits and lower their budgets accordingly. While this may be disheartening, first-time buyers can still find their way on to the property ladder.
“It’s important now more so than ever, that prospective buyers speak to a broker. No matter where they are in their homebuying journey – whether they’re still saving for a deposit or ready to begin their property search – a broker will be able to guide them through the process, identify what they can realistically afford, and how much the whole homebuying process will cost. This will help give first-time buyers a clear and actionable path to homeownership amid these uncertain conditions.”
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