While media and industry attention has focused on stamp duty reductions, the survey showed that the biggest concern for younger people is affording a deposit.
Over half (52%) of the respondents agreed that they would like to see a Government-led incentivised savings scheme, set up especially for first time buyers, to help them save for a house deposit.
The survey of 18 to 35 year olds highlights that property ownership is still a top priority, with 54% of non-homeowners wanting to own their own home within the next ten years. But worryingly, the majority see this as unachievable. Over half (52%) of non-homeowners said it was unrealistic that they will be able to buy within the next five years.
Saving for a deposit was cited as the biggest obstacle to purchasing a property with 44% believing it would not be possible within the next two to three years. More than a third (35%) thought that they would not have the income multiple needed to meet the lender's requirements. Almost a quarter (22%) said affording the monthly repayments was their biggest stumbling block. Surprisingly, only 16% of non home owners saw debt as the main barrier to buying their first home.
When asked how first-time buyer affordability could best be resolved, the two most popular responses were a Government subsidised deposit savings product and a reduction in Stamp Duty specifically for first-time buyers - both polling 52% support. First-time buyer deposit savings products are not uncommon in Germany, France, Canada, Austria, Hungary, Slovenia and Greece. All offer some form of Government-led savings advantage.
ADDITIONAL KEY FINDINGS
Non homeowners:
" 52% agreed that Government reduced stamp duty would encourage them onto the property ladder, compared to18% who said it would not make a difference
" 40% felt that it would make a difference if they could repaying a mortgage over 35 years
" The majority (44%) said that part owning a property with parents did not appeal
" 57% rejected the possibility of buying with a friend with only 19% in favour
Conservative Shadow Secretary of State for Work and Pensions, David Willetts MP said, "Along with graduate debt and the new tax regime for pension saving, higher house prices are going to have a massive impact on patterns of savings across the lifecycle. I'm not sure that politicians or the savings industry yet realise how big this could be. It means we need fresh thinking on the design of savings products. The danger is that people will decide they don't want to save for a pension before they've put down a deposit on a house, and that there is no point saving for a deposit when home ownership looks out of reach. For all the concern about getting people to save for retirement, we shouldn't forget that people need to save for other things as well. Conservatives have proposed a new Lifetime Savings Account with matching Government contributions, using the principle of 'Buy One, Get One Free'. "
Shadow Chancellor for the Liberal Democrats, Vince Cable MP, said: "In recent years first time buyers have been squeezed out of the housing market by the large increases in house prices. It is essential that we start to make the housing market more accessible to these buyers. To help this situation the Government should be encouraging savings so that buyers can accumulate sufficient deposits."
Graeme Hartop, Managing Director of Scottish Widows Bank, said: "While the market naturally looks to the Government for a lead in these matters, there is an argument in favour of shared responsibility to tackle the issue together. Mortgage lenders are already tackling the issue by introducing innovative products to assist first time buyers. However, with first time buyers being the life-blood of the future housing market, it is vital we work collectively to stimulate increased ownership among the under 35's."
Iain Anderson, Chief Corporate Counsel at Cicero Consulting, said: "This research is the clearest evidence yet that policymakers need to address the needs of first-time buyers. In the coming General Election the housing market and personal savings will feature high on the agenda. All parties need to take notice of this clear demand from younger people to buy their own homes and to develop the right policies to help them to do so."
Robin Horsfield, Head of Research at Brahm, said: "The research demonstrates that home ownership is still very close to people's hearts, and that there are potential solutions to the difficulties faced by first time buyers. The outcome depends on how committed the financial services industry and Government are to working together to find a long term, realistic scheme that will encourage people to take that first step on to the property ladder."
