Seven out of Ten First Time Buyers Delay Getting on to the Property Ladder as the Cost of Living Continues to Rise

Seventy percent of first-time buyers are holding back on buying their first property as the cost of living continues to rise, according to a report released by the Nationwide Building Society.

The research shows that people who were planning to get their foot onto the property ladder in the next 12 to 24 months have made the decision to hold off, chiefly due to the difficulty of saving up the deposit. With the cost of living spiralling, rocketing fuel prices, energy cap increases, and the war in Ukraine, British household monthly outgoings have increased to the point where many potential buyers have no disposable income and therefore are unable to save.

The expected time that first-time buyers were expected to delay was averaged out at two years, according to the report. Broken down, the figures showed that 57% would delay for two years, while 77% would delay for up to three years. Nearly 20% stated that they would now not buy for over three years in order to be able to raise the funds needed.

The report showed that there were variations in the figures according to region, with 23% in the South West and 28% in Wales saying they would wait more than three years.

The survey involved 2,051 participants, all first-time buyers looking to purchase within the next five years. The biggest hurdle they identified was the inability to raise the deposit.

With the typical deposit at 10%, it’s no wonder that first-time buyers are struggling, as this equates to around 60% of the average gross annual income.

As far as the opinion on the most difficult aspect of homeownership goes, 28% felt it was coming up with the deposit, 14% thought that it was the ability to borrow a sufficient amount for what they wanted to buy, and 12% considered keeping up the monthly payments to be the most concerning issue.

Nine out of ten people surveyed felt that the current cost of living and the predicted further increases in interest rates and energy prices were the main reasons for not being able to raise funds. 50% have reduced the amount they are saving, while a further 38% are using the savings they have to help pay their monthly bills.

One of the questions put to the participants was whether they felt 2022 was a good time to purchase their first property, resulting in an almost equal but split response, with 51% saying no and 49% saying yes.

Another problem that has arisen for first-time buyers is the ever-increasing property prices, which have priced many potential buyers out of the market. Coupled with rising rental costs, 43% of tenants said saving for a deposit was just impossible, according to the report.

69% are considering looking at areas with more competitive housing prices in order to be able to buy a larger property. Willingness to move away from London and its typically high prices was recorded at 79%.

The report showed that most first-time buyers expected to be on the property ladder at around 27 years old, although 30% felt that buying before 30 years old was highly unlikely due to financial pressures.

Due to all of these limitations, many first-time buyers are considering the option of buying with someone else in order to realistically have a chance of making their first home purchase.