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First time buyers 'billions' short of first homes

6th June 2005 | back to article listings BACK    print this article PRINT

With continued concerns over the ability of first time buyers to get a foothold on the property ladder, new reports have emerged that a large proportion of these buyers are significantly short of the funds necessary to secure their target properties, collectively in need of some £33 billion to compensate adverse credit issues.

According to research carried out by Alliance and Leicester over 50 per cent of all first time buyers are planning on taking out homeowner loans of £120,000 and above, but would nonetheless still be some £29,000 short of the average house price, which currently hovers around the £150,000 mark. In many cases young buyers are finding it increasingly difficult to afford the home of their choice, due to a combination of high prices and relatively low incomes. These buyers are subsequently being compelled to seek support of some description when investing in a property in the UK, be it help from parents, opting for co-ownership, taking advantage of proposed government shared equity schemes or simply taking out a homeowner loan.

In all of this, it isn't a simple case of first time buyers looking beyond their means when choosing their first homes. Almost 60 per cent of respondents to the Alliance and Leicester survey have admitted defeat; giving up all hope of getting on the housing ladder on an independent basis, while 64 per cent of women in their 30s are looking to spend no more than £120,000 on a first home, notably lower than the national average house price. Experts warn that these goals could be unrealistic.

" Although they need to keep their costs low, first-time buyers should perhaps reconsider their budgets," commented Stephen Leonard, director of mortgages at Alliance & Leicester. "The majority are looking for a house under £120,000 but realistically they may need to be looking closer to £150,000. Whilst there are properties in [the £120,000] price range in some areas, first-time buyers should take a look at the market in the areas that they plan to buy"

Statistics have shown that 28 per cent of all first time buyers find themselves having to move further out of urban areas to be able to afford the right size of property, while one in eight are led to relocate to an entirely different area altogether.

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