- Only 5% think they'll get on the property ladder this year
- One in three (30 per cent) potential first-time buyers want to buy this year but only 5 per cent are confident they'll be able to do so compared with 18 per cent three months ago
- Big drop in the number of first-time buyers who think house prices will come down this year
- However, 45 per cent think the time is right to make an offer lower than the asking price and of these people, more than three quarters (77 per cent) would consider doing this
Abbey’s latest quarterly first-time buyer's report reveals that, in the space of three months, the number of people who are confident about being able to buy first home this year has dropped from 18 per cent to just 5 per cent.
Thirty seven per cent of first-time buyers say there are not enough properties on the market in their price range, but 29 per cent are simply waiting for prices to come down. This latter figure has dropped from 42 per cent in the last quarter, probably as a result of recent reports of moderate increases in house prices.
Stamp duty has clearly been a barrier for first-time buyers and the Chancellor's recent decision to raise the zero rate threshold £120,000 may result in an improvement in first-time buyers' confidence over the next quarter, particularly in lower-priced areas of the country Art of negotiation.
However, in what is now considered a buyers’ market, first-time buyers are less afraid offering a lower amount than the asking price. Just under half (45 per cent) think the time is right to do this, and of these people, more than three quarters (77 per cent) would negotiate a price at the outset and15 per cent would submit a lower offer during the house buying process.
Not all first-time buyers, however, would consider putting in an offer less than the asking price. Forty three per cent would be concerned they'd lose the property and an upstanding 12 per cent think it's just not right and they would feel bad about it. One in ten (10 per cent) weren't even aware they could put in a lower offer than the asking price.
Keen to maximise their value for money, many first-time buyers would also ask for the following to be included in the price: lights (59 per cent); curtains/blinds (54 per cent); cooker (50 per cent); dishwasher (35 per cent); washing machine (34 per cent); fridge freezer (33 per cent).
Property prices have risen to such a high level that many first-time buyers simply cannot afford to buy on their own. According to Abbey’s figures, 21 per cent would consider buying through a housing association and a quarter would club together and buy with a family member or friends. Just under a quarter (23 per cent) would also consider buying a wreck in the hope that it will provide a cheaper way of securing a property. Foregoing bricks and mortar in favour of a houseboat or caravan appeals to five per cent.
The price first-time buyers are prepared to pay for their first home:
Price first-time buyers are prepared to pay %
Up to £100,000 18%
£100,000 - £125,000 17%
£126,000 - £150,000 15%
£151,000 - £175,000 11%
£176,000 - £200,000 9%
£200,000 - £250,000 7%
Over £250,000 14%
When it comes to a deposit for the property, more than half of first-time buyers (54 per cent) will save up for the deposit themselves, three per cent will get a helping hand from family but eight per cent intend to forego the deposit altogether and get a 100 per cent mortgage. And with stamp duty no longer a consideration for many more buyers, any money that had already been set aside for this could fund a larger deposit and that could ultimately open up access to more competitive mortgage deals.
Of the first-time buyers who are raising a deposit, a quarter (25 per cent) aim to have at least a 10 per cent deposit and twenty eight per cent aim to have more than a 20 per cent deposit.
Compared with Abbey's first-time buyers report in January 2005, the amount buyers are prepared to spend on their first property has increased, with 14 per cent prepared to pay over £250,000 compared with 3 per cent in January. The amount of people hoping to have a deposit of 20% or more has also increased from 12 per cent in January to 28 per cent. Barry Naisbitt, Abbey's Chief Economist, said: "In the lead-up to the most popular season for house buying, it's worrying that there has been such a drop in confidence. Our report shows just how tough it is to get on to the property ladder, but we hope that the recent increase in the stamp duty threshold will have a positive effect on first-time buyers’ confidence and affordability over the next quarter."
