Lack of first-time buyers on market

Updated: 
For sale signsOnly a quarter of people planning to buy a home next year will be first-time buyers - a share which is still well below the levels needed for a "healthy" market, research has found.

Almost a quarter (22%) of these buyers will have raised a deposit of less than 10% by the time they try to make a purchase, meaning their range of mortgage options and their access to the most competitive deals will be very restricted, Rightmove warned.


The property search website found that first-time buyers will make up just 25% of people looking to buy a home in the next year, a percentage which is "well adrift" of the 40% share often seen before the credit crunch.

London has double the percentage of potential first-time buyers than most of the rest of Britain, with a 45% share, compared with just under 20% in Wales.The housing market in London has consistently out-performed other regions, attracting strong overseas buyer interest amid the eurozone turmoil.

Raising a deposit remains the biggest concern for people trying to get on the property ladder, with 36% of people saying this is their main hurdle. The study said it was hardly surprising that many frustrated first-time buyers will try to get on the property ladder next year with a deposit of less than 10% as two fifths of those with a deposit of at least 10% said they have been saving for five years or more.

The Government launched an £80 billion scheme at the start of August which has helped to increase mortgage availability, although much of the strongest competition has been among lenders looking to attract people with larger deposits.

There have been some signs this week that the choice for people with lower deposits is improving, with the Co-operative Bank and Leeds Building Society both launching some market-leading high loan-to-value deals.

Concerns about finding a suitable first-time property to buy have grown sharply since last year, with almost one in three (29%) people saying they are worried about this, compared with less than a quarter (24%) a year ago.

The typical first-time buyer is looking to spend around £150,000, but the number of homes on the market in this bracket has dropped by 5% since last year, Rightmove said. Researchers suggested the drop is due to a reluctance of people who could be looking to make their second step on the property ladder to put their home on the market. Many potential "second steppers" were first-time buyers at the height of the property boom and are now stuck in negative equity.

Housing Minister Mark Prisk said: "The Government is taking action to help aspiring homebuyers take their next step on the property ladder - whether first-time buyers looking to purchase their first home, or existing homeowners who want to move in order to meet their changing needs."

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