- Raising a deposit continues to be the biggest obstacle for first-time buyers
- Majority think older family members should help younger ones buy a home
- Many first-time buyers not factoring in the family financial help available to them
Research from the Building Societies Association (BSA) reveals that the majority of people (53%) think older family members should offer financial assistance to help their children or grandchildren buy their first home if they can, compared to just 28% who don’t think they should.
The research shows that the biggest barrier to homeownership is getting enough money together for the deposit. 58% of would-be first-time buyers do not expect any financial assistance from their older relatives, whilst 71% of parents expect to provide some financial help to the younger generation.
49% of parents said they expect to leave a bequest when they die to the younger family members, but less than one in three first-time buyers (29%) are expecting it. There’s also a mis-match in expectations on giving and receiving a monetary gift towards buying a home, with 41% of parents expecting to do this, but only 24% of first-time buyers expecting it.
The findings also show that parents under the age of 60 are less inclined to provide financial support to younger members of their family compared to parents aged over 60. This is likely to be due to the higher value of assets held by older generations.
Whilst the high level of support on offer from older members of the family will be welcome news for first-time buyers, it cannot necessarily be relied on. The older generation have more cash savings, investments and property equity than the younger generations, but much of this is likely to be left as inheritance, only accessible at a future date. It may also be the case that some of their wealth will be spent on social care, reducing the value of the legacy they eventually pass on.
It is not surprising therefore that 68% of first-time buyers say they will be using their own accumulated savings to fund their deposit.
Decline in confidence in the housing market
Whilst house prices have risen by around 10% in the last year, almost half of people (45%) expect prices to continue to rise, with just 13% expecting a fall. Although mortgage rates are at historically low levels, making affordability easier on one hand, rising house prices are making raising a deposit increasingly difficult, and it is not surprising that this is the biggest hurdle for first-time buyers.
This may be one of the reasons for a drop in confidence in the housing market, with just 21% thinking now is a good time to buy a property, down from 26% three months ago. Almost a third of people (30%) do not think that now is a good time to buy. It’s likely that this decline in sentiment is a result of a number of factors including the end of the Stamp Duty holiday in September, the lack of properties on the market and the emergence of the new Omicron variant of Covid-19.
Commenting on the findings, Paul Broadhead, Head of Mortgage and Housing Policy at the BSA said:
“With house prices rising considerably more than inflation and wage growth, it’s not surprising that first-time buyers find raising a deposit the most difficult aspect of getting on the property ladder and something it is hard to keep pace with. But it’s clear that many families are more willing to share their wealth and give financial help than the younger generation appreciate.
“Perhaps families should use the festive period to talk candidly to each other about their future plans and aspirations and how best to use their inter-generational wealth. It could be the best present under the tree for all!”
Notes to Editors:
- Paul Broadhead, Head of Mortgage and Housing Policy at the BSA is available for interview. Please contact Tanya Jackson or Katie Wise to arrange.
- The Building Societies Association (BSA) represents all 43 UK building societies, as well as 6 credit unions. Building societies have total assets of over £477 billion and, together with their subsidiaries, hold residential mortgages over £351 billion, 23% of the total outstanding in the UK. They hold over £328 billion of retail deposits, accounting for 18% of all such deposits in the UK. Building societies account for 40% of all cash ISA balances. They employ approximately 43,000 full and part-time staff and operate through approximately 1,380 branches.
- For the December Property Tracker survey fieldwork was undertaken between 2-3 December 2021. Total sample size was 2094 adults. The survey was carried out online. Additional fieldwork was undertaken between 7 -8 December. The total sample size was 2,000 adults. The figures have been weighted and are representative of all GB adults (aged 18+). All figures, unless otherwise stated, are from YouGov Plc.
- Results calculated by the BSA using YouGov data. First-time buyers who said they did not have older family members were excluded. Parents who said they did not have younger family members were excluded.
- Those likely to buy are existing home owners as well as people who say that they are looking to buy their first home, or return to the market having previously owned, and who also say they are likely to move in the next six months.
- The full Property Tracker Report can be downloaded here.
- Respondents were given the option to select up to three’ barriers’ when asked what they think are most likely to stop someone from buying a residential property at the moment.
Tanya Jackson, External Affairs, Tel: 07881 501098 firstname.lastname@example.org
Katie Wise, External Affairs Officer, Tel: 020 7520 5904, email@example.com