First-time buyers optimistic

Over 1.3 million non-homeowners hope to pay less than the average house price for their first home, data from the latest Alliance & Leicester Mortgages quarterly movingimproving index reveals.

Although the current average UK house price is 184,152, 75% of first-time buyers are hoping to snatch up a bargain property costing less than 184,000.

This compares to nearly 300,000 first-time buyers in the UK who plan to spend over the national average house price on their first home, with 15% prospective new buyers currently renting or living with their parents planning to spend between 184,000 and 250,000.

Stephen Leonard, director of Mortgages at Alliance & Leicester, says: “Our survey reveals that most first-time buyers are pragmatic about the amount of money they can afford for their first home. With the majority choosing to look at houses below the UK national average, affordability is first and foremost in their thoughts.

“First-time buyers are in a good position to take advantage of the positive moves lenders are taking to ease their financial burden.”

“Lenders such as Alliance & Leicester are enabling more buyers to get on the housing ladder in a responsible manner by introducing greater lending flexibility which will give prospective buyers something to cheer about.”

Non-homeowners are, overall, more upbeat about their ability to afford a house, with just 22% saying they cannot afford a property. Last quarter 28% felt they could not afford to get onto the property ladder, perhaps an indication that the base rate cut has had an optimistic effect on first-time buyers hopes to get on the housing market.

Of all the regions, people in the East of England are the least confident about getting onto the housing ladder as nearly a third (30%) feel they cannot afford to buy, while those in the South West are most confident as only one in ten (11%) feel the same way.

People in South West (20%) are also the most optimistic about getting their foot on the property ladder for the first time across all regions.

Parents are giving their children the opportunity to save towards getting onto the housing ladder as the research reveals that living at home is still the favoured option for many. Those in their 20s are most reluctant to leave home as one in four (25%) choose to remain in the family home.

And it seems men are the worst at cutting the apron strings. Men in their 20s are 50% more likely to live at home with their parents than women (29% vs 18%).

The research indicates that more women (56%) in their 20s choose to rent compared with their male counterparts (40%). Of all the regions, Londoners are most likely to live at home and they are twice as likely to do so as those in the East Midlands (13% v 6%).

Leonard says: “Living at home with parents provides a chance for those wishing to get onto the housing ladder to benefit from no, or low rent, while enabling them to kick-start their savings for a deposit towards a house. This also signifies a shift in social trends with more young men choosing to live at home than women. For the last two quarters we have seen more men in their 20s indicate that they would rather stay put with their parents than flee the nest.”

It is not just first-time buyers who are optimistic about getting onto the housing ladder. Nearly half of existing homeowners (47%) who are looking to move further up the property ladder expect to pay up to 100,000 more than their current property is worth.