CML news & views
Issue no. 18 - 23 September 2008
First-time buyers adjust to the credit crunch
Recent market developments have not deterred first-time buyers from wanting to become home-owners, but attitudes to saving for a deposit have changed since the onset of the credit crunch.
A poll of more than 1,500 first-time buyers, carried out by The Co-operative Bank and Places for People, showed that, despite current problems in the housing market, more than half (54%) thought of renting as “throwing money down the drain.”
The most recent data from our regulated mortgage survey shows that first-time buyers are now, on average, paying a deposit of more than £19,000, equivalent to 15% of the property’s value. The Co-operative Bank’s survey reveals that a majority estimate that it will now take them up to two years to begin to think about buying their first home.
The survey highlights changes in attitudes since the credit crunch. A year ago, more than half of first-time buyers (57%) were not prepared to make any sacrifices to get on the property ladder. Now, less that one in 10 (9%) takes that approach.
The survey also asks first-time buyers what they are prepared to forego in order to become home-owners. Top of the list was eating out (with 53% prepared to sacrifice it), followed by holidays abroad and weekends away (50%), new clothes (40%), coffee and lunch from shops (39%), alcohol (39%), smoking (27%), delaying having a family (22%) and getting married (20%).
It also looks at the compromises buyers are prepared to make in choosing their first property. Nearly half would go without extra bathrooms (49%) or a garage (48%), with 40% prepared to make concessions on the size of outdoor space or an extra bedroom. But more than three-quarters would not compromise on location (80%) or on having some sort of a garden (78%).
Only a quarter of first-time buyers felt that they alone were responsible for getting a foot on the property ladder. More than half (53%) thought the government should assist, with less than one-fifth (19%) believing that the private sector should help. Only one in 20 thought their families should provide support.
