Despite figures that show almost 40 per cent of house purchase transactions are by FTBs, the research has shown the high figure of FTBs is most likely distorted by buyers returning to the market after a period of renting or the breakdown of a relationship. ‘Returners’ differ from the stereotypical picture of a FTB as they tend to be older and on higher incomes, with access to deposits funded from past increases in house prices. In 2005, returners may have accounted for up to 20 per cent of all FTBs.
Deposits and income multiple constraints are the biggest hurdles for true FTBs, with less than 10 per cent of 22 to 29 year olds able to overcome lending income multiple constraints and buy a home. Only 20 per cent of homeowners are in the 20 to 24 age group.
Fionnuala Earley, Nationwide’s group economist, said: “For many true first-time buyers, the deposit and income multiple constraints are too strong and prevent them entering home ownership at all. This is even before considering other calls on their income such as student debts. Mortgage payments for a first-time buyer on average earnings now account for around 42 per cent of take-home pay.”
Jeff Knight, head of marketing at GMAC-RFC, said: “No one has got any figures on true FTBs, it’s all anecdotal. While income multiples are a problem, it’s important to realise a lot of people are making the lifestyle choice to stay away from the market and fund other things in their lives. What’s interesting is how many FTBs now fall into the non-conforming world, which historically we haven’t had. There’s the continued growth in student debt and people are also more used to that now.”
