A new survey from Aviva has revealed that over a million people may rule themselves out of the first-time buyer market, due to pressures caused by the cost of living crisis.
The survey, focused on under 45s who have never owned a property, identified that just under half of those asked were not currently house-hunting, but intend to in future, with a further 16 per cent saying they have no intention of doing so. Of these, a fifth specifically cited the cost-of-living crisis and inflation as making buying a house unaffordable.
The survey also shows the cost of a mortgage is being substantially underestimated, with the potential to dissuade more people from moving onto the property ladder.
Across the country and all age groups, survey respondents intending to buy or in the process of buying their first property say they expect to pay £196,700 on average and anticipate putting down £25,210 as their deposit. Based on these figures, they say they are expecting a monthly mortgage payment of £718.60.
However, when these figures were put into a high street building society online mortgage calculator by Aviva, the results show you would be paying £1,103.86 per month on a two-year fixed deal, or £928.07 monthly on a two year base rate tracker, an underestimation of up to 54 per cent.
The role of intergenerational giving remains as important as ever for helping cash-strapped first-time buyers.
Across the study, 12 per cent of respondents said they were expecting a gift or loan from parents to help meet their costs, and four per cent said they expect the same from grandparents. This expectation is higher among the youngest age group (18 – 24), with 15 per cent saying their parents, and six per cent saying grandparents, would help them.
Individual contributions are more generous from grandparents – typically they contribute a gift of £18,850, and £16,990 as a loan, compared with £17,730 and £14,130 respectively from parents.
If this level of gifting or loaning were seen across the first-time buyer market, this would represent more than £23 billion of first-time buyer costs being provided by the buyer’s family.
An Aviva spokesperson says: “The amount of support being given or intended by different generations of the family to first-time buyers is substantial. We have seen this trend, particularly of grandparents providing funding, increase in recent years. Family members are more and more willing to use wealth they have accumulated in property over the years to provide younger people with a leg up onto the property ladder.”
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My children are looking to buy now, one thing they will never do is rent…. Not a chance. This current period has just given them more time to save a bigger deposit, if they rented then that advantage would be lost, i am looking at selling one of my properties early to split it between them to further boost their deposit…. It’s a dog eat dog world out there, sad for the family I will evict, but this government has made it impossible to continue. God help those without parents like me, they are up the creek.
You are right, a lot of people will be up a creek without a paddle in the next couple of years, if not longer. It's all very sad and as we know the Govt could act to improve things, but instead they are making it worse.
It would be very unwise for first time buyers to be buying now unless they have a large deposit to offset the coming drop in property values, hold off, this time next year houses will be 10% cheaper, and leasehold flats will be 20% cheaper, it will be a buyers market
Agree, we are in no rush, there are sellers who are still in the “ Pre-Liz” world, they have not really understood how things have changed…. They will… when their properties don’t go.
I'm selling regardless of what the market is like. Have given notice to a tenant last week and intend to give notice in a couple of months time to another. I've had enough of this sh** show. When you lose control of your own investments and get increasingly hammered with unfair taxes it's time for a sharp exit. I'll invest in something else. I've had a good 20 odd years out of it but I can see the writing on the wall. I'm not waiting for the government to impose compulsory sales of second homes etc.. Z at knocked down prices.... Think I'm in cuckoo land? Think again!
Another wicked landlord deliberately reducing rental stock. We should bring back the stocks for such heinous crimes. Shane just think yourself lucky that the death penalty has been abolished (I suspect that Gove would like it back for landlords).
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