Despite the current housing market outlook, the research conducted with 1,500 first time buyers shows that over half of those questioned still feel renting is ‘throwing money down the drain' (54%), with the majority estimating that it will take them up to two years to begin thinking about buying their first home.
As a result first time buyers are now making more sacrifices to enable them to save for a home. According to research conducted last year before the credit crunch over half of first time buyers (57%) were not prepared to make any sacrifices to get onto the property ladder, whereas now less than one in ten share this approach (9%). Also, the number of people who are prepared to forego their foreign holiday (50%) and eating out (53%) has doubled since last year.
Sacrifices made by first time buyers in decscending order are: Eating out 53% - Holidays abroad and weekends away 50% - New clothes 40% - Coffee and lunch from shops 39% - Reducing alcohol consumption 39% - Quitting smoking 27% - Delaying having children 22% - Getting married 20% - Owning a pet 14% - Car ownership 12%
The findings also highlight the actions that first time buyers are taking at the moment, which include lowering their expectations of the properties they are looking at (46%) and changing their shopping habits (36%). In addition, some first time buyers are even trading on eBay and at car boot sales (18%), reducing the amount of energy they use, amid rocketing fuel bills (19%) and taking a second job (11%) to save for a deposit.
When it comes to the choosing a property, the research also uncovers the main compromises first time buyers are prepared to make with the actual property itself. Almost half will be happy to have no extra bathrooms (49%) or a garage (48%) and over a third are prepared to make allowances for the size of the outdoor space (40%), or an extra bedroom (40%). However three quarters of people will not sacrifice a garden (78%) or compromise on room size or location (80%).
But only a quarter of first time buyers believe that the onus should be completely on them to reach the first rung of the ladder; with the majority feeling the Government should take more responsibility (53%). Only a fifth of buyers think the private sector should do more (19%). Interestingly less than 1 in 20 feel that it should be up to families to step in and provide the support needed.
Victoria Drummond, Operations Manager for Ownhome said: "This new research shows that the dream of owning a home is now out of reach for many first-time buyers, as they struggle to save for a deposit, against a backdrop of soaring household bills and the increased cost of living.
"As a result many more people are being entrepreneurial and making sacrifices in a bid to try and claw their way onto the property ladder including cutting down on eating out, holidaying in the UK rather than abroad, and swapping supermarkets to drive down their food bills.
"It is vital that the Government and the housing industry continue to offer simple, clear and innovative products that provide first-time buyers with the essential financial support needed to help them take their first steps onto the property ladder."
In order to help first time buyers and key workers buy a home, The Co-operative Bank and Places for People provide a shared equity scheme, called Ownhome, which is available throughout England to those who have a household income of less than £60,000 and allows buyers to essentially borrow up to 100% of the value of a property through an equity loan of up to 40% with Places for People and a conventional mortgage for the remainder with The Co-operative Bank.
The Ownhome loan from Places for People will in effect top up the mortgage from the Co-operative Bank and enable many first-time buyers to afford their first property. Ownhome customers will not have to pay interest on the loan for the first five years. After five years there is a fixed interest rate of 1.75% p.a. on the Ownhome loan. From year eleven of the Ownhome loan the interest rises to a fixed rate of 3.75% p.a. for the remainder of the Ownhome loan period.
