First-time buyers are shut out of the market at the moment. It's in all of our interests to see that change.
The housing market is stuttering. House prices are faltering according to Nationwide, while transaction levels are still incredibly low. And the root of the problems? The humble first-time buyer.
The latest housing market survey by the Royal Institution of Chartered Surveyors found the weakest readings for new buyer enquiries for more than a year and a half. And the trade body has warned that until that changes, the housing market will remain in the doldrums.
RICS Chief Economist Simon Rubinsohn said: “It is unlikely that we will see any real movement until purchasing a property is more affordable and accessible for the likes of first-time buyers.”
First-time buyers are the very lifeblood of the housing market. Without them, it’s near impossible for those who want to buy their second property to take that step up the ladder. The whole thing grinds to a halt, and only serves to boost the rental market.
[SPOTLIGHT]That’s not to say that first-time buyers don’t want to buy a property. I spoke to Matthew James, Head of Research at Rightmove, about its own research into demand from first-time buyers. He highlighted that one in four of those who expect to buy in the next 12 months will be taking their first step onto the housing ladder.
He added: "There's also demand from the rental sector. More than half of those people currently renting say they are doing so because they cannot afford to buy. They are effectively trapped."
So first-time buyers are needed, and actively want to buy properties. If house prices crashed sharply, more would be able to buy. But that doesn’t look like happening any time soon.
So should lenders be doing more to help them buy?
Nick Cooper, mortgage adviser here at lovemoney.com, highlighted that there are a number of things lenders already do, aimed at making life easier for first-time buyers. These include free valuations, cashback, and reduced arrangement fees. But he added: "There's not that much available. It would be nice to see a lot more mortgages requiring a lower deposit, but at a more competitive rate. At the moment, anything with a 10% deposit costs in excess of 6%."
First-time buyers are the foundations of the housing market. But at the moment, too many of them find it simply impossible to buy. Unless that’s addressed, the housing market will be in the doldrums for some time to come.
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