When tenants were asked in January when they planned to purchase their first home, 15% replied that they expected to do so within the next twelve months – up from 6% who said the same in September 2015 and 14% in February 2015.
Conversely, the proportion of renters who believed that they will, realistically, probably never set foot on the property ladder stood at 10% – down from 12% in September and 13% in February 2015. In addition, those in rental accommodation wishing to become property-owners has remained at sky-high levels, with 94% of current tenants stating in January that they wanted to own their home, representing no change on February 2015.
This enthusiasm for home-ownership defies the rising costs associated with owning property. The average first-time buyer deposit stood at £28,393 in January – an increase of 6.3%, or £1,692, on a twelve-month basis and the highest since August 2013. This has impacted on the proportion of average first-time buyer income that is eaten up by deposit costs. In January 2015, a property deposit ate up, on average, 70.3% of first-time buyer income; by January of this year, the figure had risen to 72.2% – the highest since December 2013.
Equally, the average LTV rate is beginning to fall, with January’s figure of 82.9% representing a 0.5 percentage point monthly fall and a 0.3 percentage point quarterly fall. This means those looking to buy their first home will be able to borrow less against the value of their desired property and, as a result, will have to pay more upfront. Despite this, the absolute number of higher LTV loans rose in January by 7.3% on a monthly basis, according to the latest Mortgage Monitor from e.surv.
Adrian Gill,director of estate agents Your Move and Reeds Rains, said: “First-time buyers are moving from weariness to fearlessness. They are long-used to the housing market being a sellers’ arena and have come to expect daunting deposit costs and prohibitive property prices. But, ultimately, the desire among first-time buyers to own their own home is outweighing those considerations as they resolve to get on the property ladder sooner rather than later – be that through saving money or compromising on their property specifications.
Moreover, despite the gloomy headline figures, there are still enough positive fundamentals in the property market to make taking the plunge a worthwhile investment. High LTV loans are plentiful, the average mortgage rate is still at rock-bottom levels – bolstered by the Bank of England’s refusal to contemplate raising rates anytime soon – and the economic outlook remains mostly sunny. Indeed, first-time buyers getting on the ladder now are demonstrating cunning as well as courage – they understand that, while the homeownership costs may not be ideal, conditions could be worse. After months of turbulent fortunes, they’ve come to know better than to look a gift horse in the mouth.”
