A survey from property portal Share to Buy suggests that over three quarters of buyers believe they cannot afford to purchase a home on the open market.
Completed by over 2,600 prospective purchasers, some 76% of respondents feel that buying as a single person on the open market in 2024 is not achievable, while 76% also confirmed they are not receiving any financial help from family members to put towards a deposit – battling rising interest levels and inflating house prices alone.
Whilst the average deposit on the open market currently sits at £61,000, 27% of surveyed buyers had saved between just £5,001 and £10,000. Despite this, almost 40% of respondents have revealed they hope to buy a property within the next six months.
A spokesperson for the portal said “it is really disappointing that such a high proportion of hopeful first time buyers feel that properties on the open market are wholly inaccessible – with fears that they may be permanently priced out of homeownership. Unless you’re receiving financial help from family, it can be really difficult to put enough money aside to save towards a sky-high house deposit, particularly if you’re already privately renting somewhere. This new data highlights why alternative housing schemes like Shared Ownership are key; allowing buyers to step onto the property ladder at a significantly more affordable level – with deposits for a 25% share of a studio apartment on Share to Buy currently starting from a minimum of £3,781.”
New research by consumer group HomeOwners Alliance shows that for many young people, homeownership has become an impossible dream.
A sentiment survey by the group suggests that some 1.9m aspiring homeowners do not think they will follow in the footsteps of their home owning parents.
Three quarters say their parents owned their home, but only 48% expect to own themselves.
The research reveals that most homeowners follow in the footsteps of their home owning parents - 81% of current homeowners - suggesting that as homeownership declines so do the prospects of future generations to own.
The majority (71%) of respondents who do not own their home, aspire to do so in the future. But more than half (52%) do not think they will ever be able to. Main reasons for not owning include high house prices (60%), saving for a deposit (44%), ability to afford monthly mortgage repayments (33%) and the ability to get approved for a mortgage (31%).
Meanwhile some 28% of younger homeowners rely on government schemes in order to afford a home. In addition 30-plus year mortgage terms are becoming the norm with 38% of homeowners aged 18-34 having a term of 30 years or more.
How first-time buyers can get on to the property ladder
Stepping on the property ladder tends to be much more difficult for first-time buyers today. Not only are house prices generally much higher than they were a few years ago, but mortgages are also less affordable due to higher interest rates.
New-build homes are an increasingly popular option for first-time homeowners across the UK. As well as the houses themselves coming with many benefits such as better energy efficiency and 10-year warranties, there are some helpful schemes available that make buying a brand new home much more appealing.
These schemes are specifically designed to help first-time buyers onto the property ladder, with smaller deposits and discounts on the purchase price. The three main schemes available for new-build homes are Deposit Unlock, Shared Ownership and First Homes.
Here we look at what each financial support scheme means, with some expert advice from Zoopla.
Deposit Unlock
Deposit Unlock is a relatively new scheme that was launched by the house-building industry to enable first-time buyers to buy a new-build home with just a 5% deposit and a 95% mortgage.
When you buy your home, the developer pays a percentage of the purchase price into an insurance policy for your mortgage provider. That insurance policy in turn reduces the risk of lending for your mortgage provider, as it will cover any potential losses for them if you were to default on your mortgage.
The insurance also enables you to benefit from a lower interest rate than you would normally get if you were borrowing 95% of your property’s value. The scheme is available on any qualifying house or 2+ bedroom apartment. There are currently 39 house-builders taking part, including Bellway, Redrow and Taylor Wimpey.
Shared Ownership
Shared Ownership is a government scheme that offers first-time buyers the chance to buy a share of a property from a housing association.
As you only own a part of the property, you can buy it with a smaller deposit and mortgage - but you’ll still have to pay rent and some fees on the parts you don’t own. Shared Ownership homes can be new builds, existing properties, houses or flats. All Shared Ownership properties are leasehold, even houses, which is unusual.
The benefits are a much smaller mortgage and a lot less time and money spent on saving for a deposit.
First Homes
The First Homes scheme launched in 2021 to help local first-time buyers and key workers onto the property ladder. It offers new-build homes with a 30 to 50% discount off the purchase price.
The reduced rates will apply to the homes forever, meaning that buyers on a low income will continue to benefit every time the property is sold. The government has pledged a further 10,000 properties will be added to the First Homes scheme every year.
To qualify for the First Homes discount, buyers need to meet certain criteria:
- You must be a first time buyer. That means that anyone who has ever inherited or been gifted a home is ineligible.
- You must earn less than £80,000 (or £90,000 in London), whether you're buying solo or as part of a couple.
- The property you’re buying must cost no more than £250,000, or £420,000 in London.
- You must already work or live in the area you’re wanting to buy in, or have a connection to it. Say you grew up there or have family there, for example.
Key workers will be prioritised.