First-time buyers are on the decline, but don't give up hope! With the right level of commitment, you can get on the ladder.
American comic George Carlin once asked: 'What do you do when you see an endangered animal eating an endangered plant?'
Good question, but it's not one of those questions we have to ask ourselves very often. A more relevant question: 'Are first-time buyers an endangered species?' was considered by Citywire last week. Obviously they don't literally mean 'endangered', as there will always be new buyers.
The questions Citywire are really asking are: 'Will it get even harder for new buyers?' and 'Will first-time buyer numbers decline much further?' Thank God for the hypothetical question. George Carlin also said: 'What if there were no hypothetical questions?' so here are a few of my own:
Will the situation improve?
Buy-to-let ties up a lot of properties that could otherwise be first homes, but this practice is becoming increasingly unpopular with, well, everyone who doesn't buy-to-let. Even politicians have grasped this, although so far their efforts to significantly improve the situation have failed. When they realise that increasing supply at a swifter rate is the answer, they may come up with some viable solutions, such as building more homes more quickly.
Not that it's easy. A viable solution would be the best thing since sliced bread, although wiseman George Carlin once asked: 'What was the best thing before sliced bread?'
How will higher interest rates affect the market?
No one knows when interest rates will rise, but when they do it's unlikely to help house prices. Banks and building societies will probably still offer mortgages at huge multiples of salary, therefore making a start on the property ladder easier.
Also, higher interest rates may force more homeowners and buy-to-let investors to sell. If enough of them do this, the balance of supply and demand will improve and prices will come down.
Is there any hope for first-time buyers?
It may be that political solutions will continue to have a negligible impact, and that higher interest rates won't significantly increase supply or reduce house prices. However, we shouldn't despair! Bear in mind that this is a market - and all markets fall as well as rise. At some point this one won't perform well, so keep an eye on house prices for when they become affordable. Remember that if house prices are rising on average that doesn't mean they're rising everywhere at the same rate. Different towns and even different roads may become affordable sooner than you think.
What can we do now?
When we are finding it difficult to get a job, we tend to put in little effort. We have the same attitude when buying a house. If we're struggling to find something suitable, we give up. The thing is, if competition is tight, we should put in more effort - not less. Those who do this are the ones who get the properties.
There are lots of houses out there and they don't all sell for a uniform price. You should extend your search and re-double your efforts. View lots of properties, even ones thousands of pounds over your budget. Just make an offer you can afford and see what happens, as some people will be keen for a quick sale. Ask to look around properties or areas you wouldn't normally consider, as they may surprise you. I live in Kilburn, which has a bad reputation, but it's actually quite pleasant!
And that's the deal really: visit lots and lots of properties and make offers on all the ones you like. The more properties you look at, the greater your chances of finding a property you like that you can afford. And don't forget there are plenty of schemes to help first-time buyers a helping hand.
It takes a lot less effort to get a mortgage these days. Compare mortgages through lovemoney.